Oil slides over 3% to hit one-week low as US unveils tough sanctions on Iran

On Tuesday, oil prices experienced a significant drop of more than 3%, dipping below the $90 mark, as the US unveiled a series of stringent sanctions on Iran. Brent crude, a global benchmark for two-thirds of the world's oil, plummeted by 3.1% to $89.31 per barrel, while West Texas Intermediate, the gauge for US crude, fell by 3.34% to $82.17 per barrel.

The sharp decline in oil prices came after Brent had gained 6.6% and WTI had surged 5.7% the previous week, following the announcement of Operation Economic Outcast by US Treasury Secretary Scott Bessent. The new sanctions, aimed at isolating Iran's economy, impose harsher economic measures on Tehran to break the stalemate in negotiations.

The Treasury Department emphasized the broadening scope of secondary sanctions on entities and countries dealing with Iran, setting a deadline for shutting down Iran-related activities and severing economic ties. Analysts noted that the market was stabilizing as investors weighed the impact of the new sanctions against underlying shipping constraints and geopolitical flashpoints.

Iran's Supreme National Security Council Secretary, Mohsen Rezaei, threatened to halt all oil exports through the Strait of Hormuz if the US proceeded with its plan, adding to the uncertainty in the oil market. Meanwhile, strikes on vessels in the Strait of Hormuz continued, with an oil tanker being hit by an unidentified projectile off Oman's northern tip.

The situation was further complicated by attacks from Yemen's Houthi rebels, especially targeting Saudi-linked ships in the Red Sea. The US has signaled its willingness to reopen the Strait of Hormuz, but Tehran has yet to commit to any measures. Gold prices, on the other hand, eased after reaching a three-month high, influenced by a stronger dollar and profit-taking.