Iran vows retaliation after widened US sanctions

Oil prices plummeted over 3% on Tuesday, plummeting below the $90 mark on the Brent benchmark, as investors grappled with the impact of the US's imposing new sanctions on Iran. Brent, which reflects the price of two-thirds of global oil, fell 3.1% to $89.31 per barrel by 3:55pm UAE time. West Texas Intermediate, the gauge tracking US crude, tumbled 3.34% to $82.17 per barrel.

The crude market experienced a one-week low after registering significant weekly gains last week, with Brent soaring 6.6% and WTI jumping 5.7%, following the US Treasury Secretary Scott Bessent's announcement of further punitive economic sanctions against Tehran to break the deadlock in talks. The US operation, dubbed Economic Outcast, was announced on Monday, aiming to isolate Iran's economy to resolve the impasse.

The Treasury Department announced a broadening of secondary sanctions on companies and nations engaging with Iran, providing every country with a deadline to cease Iran-related activities and serve a final notice to sever economic ties. Analysts at Duncan Oil stated that the markets are stabilising as investors weigh the implications of the expansive new economic sanctions against Iran against underlying shipping constraints and geopolitical flashpoints.

Iran's Supreme National Security Council Secretary Mohsen Rezaei warned that Tehran could halt all oil exports through the Strait of Hormuz if the US proceeded with its plan, adding to oil market volatility. Strikes on vessels continued in the crucial waterway, which before the war accounted for about a fifth of the world's energy exports.

An unidentified projectile struck an oil tanker off Oman's Musandam peninsula early Tuesday, according to the UK Maritime Trade Operations. The situation has been further complicated by attacks from Yemen's Houthi rebels, particularly targeting Saudi-aligned ships in the Red Sea. The US has conveyed a message to Iran via Pakistan regarding the potential reopening of the Strait of Hormuz, but Tehran has yet to commit to any action.

Gold prices, considered a hedge against inflation, eased after reaching a three-month high, with the precious metal inching up 0.1% to around $4,642 per ounce due to a stronger dollar and profit-taking.