Oil Prices Fall Ahead of US, Iran Sanctions
Oil prices fell more than one dollar on Monday as investors took profits and awaited expected new U.S. sanctions on Iran. Brent crude futures fell $1.16, or 1.23 per cent, to $93.23 a
Oil prices dropped over a dollar on Monday as traders reaped profits and anticipated upcoming U.S. sanctions against Iran. Brent crude futures slipped $1.16, or 1.23%, to $93.23 per barrel at 11:31 a.m. GMT. West Texas Intermediate crude fell $1.55, or 1.78%, to $85.51 per barrel. Both contracts had already gained 5% during the previous week.
This decline followed deadlocked U.S.-Iran talks, which have limited oil shipments through the Strait of Hormuz, a key route for global energy transport. The U.S. Treasury Secretary, Scott Bessent, is slated to unveil new sanctions on Iran during a press conference later on Monday. Bessent has vowed to implement the "toughest sanctions in history" against Iran.
President Donald Trump has also hinted at sanctions targeting nations that trade with Iran. Analyst Tamas Varga of PVM warns that an embargo could shrink regional oil supplies and tighten restrictions on Iranian oil exports. Iran has denounced the impending U.S. sanctions, while President Masoud Pezeshkian has called for a diplomatic resolution.
Pakistan's army chief is currently in Tehran for mediation talks prior to the anticipated U.S. announcement. Shipping data revealed fewer than 20 cargo vessels passed through the Strait of Hormuz over the weekend due to the imposed restrictions on energy shipments. Iran, however, granted permission to some Iraqi oil tankers to transit the strait after repeated requests from Baghdad, according to Iran's state news agency IRNA.
Traders noted that Iraq's SOMO and QatarEnergy had also offered crude for loading within the strait. SEB analyst Bjarne Schieldrop believes current Brent prices indicate sufficient oil is still flowing through the Strait of Hormuz. He cautioned that a major shift might occur if Iran fully closes the waterway using rockets and drones.
Brent crude prices have climbed to around $92 per barrel from $71 in June, spurred by dwindling inventories and worries over ongoing Middle East disruptions. Morgan Stanley analysts have upped their Brent price projections, anticipating prices could reach $100 per barrel in the fourth quarter. The International Energy Agency is currently not contemplating another release of oil from strategic reserves, as stated by its chief, Fatih Birol.
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