Oil steadies as investors weigh impact of latest US sanctions on Iran

Oil prices regained some ground on Tuesday after falling more than 2% the previous day, as investors considered the impact of fresh U.S. sanctions against Iran. Brent crude futures climbed 27 cents, or 0.3%, to $92.44 a barrel, while U.S. West Texas Intermediate crude increased 37 cents, or 0.4%, to $85.38. Both contracts were lower on Monday, with U.S. crude oil hitting a one-week low after recent rallies.

Market participants seem largely unconcerned by Washington's efforts to tighten economic pressure on Iran, treating it as merely marginal rather than a market-moving event, according to ING commodity strategists. U.S. Treasury Secretary Scott Bessent announced on Monday an expansion of sanctions aimed at cutting off Iran's economic lifeline, urging countries to sever ties or face being cut out of the dollar-based financial system.

While the U.S. Defense Secretary did not rule out military action against Iran, the country is increasingly relying on economic coercion, which analysts believe removed concerns about threats to Middle Eastern oil supply. Iran remains capable of responding by disrupting shipping, keeping a residual premium in oil prices. A tanker was hit by an unidentified projectile on Tuesday, disabling it about 9 nautical miles northeast of Oman's Ash Shishah.

Iran still claims control over the Strait of Hormuz, which typically carries about 20% of global oil use before the February war. The supply disruptions have led countries to reduce their commercial and strategic reserves; the U.S. Strategic Petroleum Reserve's crude oil stocks fell 3.7 million barrels to 289.7 million barrels last week, the lowest since November 1982.