Oil prices drop nearly 1% as U.S. prepares more Iran sanctions

Oil prices experienced a significant drop in early trading on Monday, reflecting profit-taking after a sharp increase over the past two weeks. The anticipation of more stringent U.S. sanctions on Iran, which would likely lead to further supply disruptions, was a key driver behind the price surge. Brent oil futures climbed 0.9% to $93.51 per barrel, while West Texas Intermediate crude futures fell 1.1% to $86.08 per barrel.

U.S. Treasury Secretary Scott Bessent announced that the country would be imposing its most severe sanctions on Iran to date on Monday. His comments came following several U.S. officials, including President Donald Trump, warning of an "economic D-Day" against Iran. Bessent is set to unveil the new sanctions during a press conference at 14:00 ET (18:00 GMT) on Monday.

Iran's National Security Council Secretary, Mohsen Rezaee, warned that "not a single drop of oil will be exported" through the Strait of Hormuz or any other part of the Persian Gulf if the economic conflict persists. The ongoing standoff in Hormuz has shown little sign of resolving, with Tehran effectively blocking the waterway in response to U.S. actions.

As a result, oil flows through the Strait have been slowing, further exacerbating tensions in the region. The U.S. has positioned the conflict for prolonged duration, potentially spilling over into other areas such as the Red Sea, where Iran-backed Houthi rebels have imposed a naval blockade against Saudi Arabia.