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

Oil prices steadied on Tuesday, recovering from a two percent drop the previous day, as investors weighed the potential impact of the latest US sanctions against Iran. Brent crude futures climbed 27 cents, or 0.3 percent, to $92.44 a barrel, while US West Texas Intermediate crude rose 37 cents, or 0.4 percent, to $85.38. Both contracts had settled lower on Monday after experiencing a one-week low due to profit-taking following recent rallies.

The market appears to be largely unconcerned by Washington's push for tighter economic pressure on Iran, with traders treating the effort to push partners away from Iranian trade as minor rather than market-moving, according to ING commodity strategists. US Treasury Secretary Scott Bessent unveiled an expansion of sanctions on Monday, aiming to cut off Iran's economic lifeline and force an end to the conflict.

However, he did not specify which countries would be targeted or when the penalties would take effect, instead giving them time to comply with the new directive.

US Defense Secretary Pete Hegseth hinted that the U.S. would not rule out using military force against Iran, but analysts noted that economic coercion appears to be the preferred method, which has removed concerns about threats to Middle Eastern oil supply due to the war. Nevertheless, Iran still holds the potential to disrupt shipping and maintain a residual premium in oil prices.

A recent incident involved an oil tanker being struck and disabled by an unidentified projectile about 9 nautical miles northeast of Oman's Ash Shishah. Iran asserts control over the Strait of Hormuz, which typically carries cargoes equal to about 20 percent of global oil use. The country has named 45 tankers that violated its rules on crossing the strait and threatened action against them, including confiscating their cargoes.

Supply disruptions caused by the US-Israeli war on Iran have led countries to draw down their commercial and strategic reserves, with the US Strategic Petroleum Reserve falling to its lowest level since November 1982.