Oil steadies as US ‘economic D-Day’ plan offers little clarity on Hormuz deadlock

Oil steadied as the United States unveiled an "economic D-Day" plan to pressure Iran through sanctions, though details on lifting the blockade of the Strait of Hormuz remained vague. West Texas Intermediate traded near $85 a barrel, after cutting more than 2% in the prior session, while Brent closed around $92. The US Treasury Secretary, Scott Bessent, announced on Monday that countries must adhere to a timeline for severing ties with Iran or face unilateral punishment as part of the campaign.

Crude has seen a 50% increase since the start of the sixth month of war in the Middle East, which continues to impede the shipping of crude and refined fuels out of the region. While the Office of Foreign Assets Control sanctioned around 60 entities, including Iran's oil-revenue generation networks and shadow fleet vessels, the plan has not yet led to an immediate change in physical supply.

Haris Khurshid, the chief investment officer at Karobaar Capital, stated that traders require more than warnings to incorporate geopolitical premiums. Iran has acknowledged its readiness for the new economic campaign, with fuel shortages and longer petrol station lines already affecting the country. The conflict has enabled traders and shipowners to make significant profits by purchasing crude at a discount to global benchmarks inside the Persian Gulf.