Oil prices sink for second day as Washington swaps Iran war threat for ‘economic D-Day’

Oil prices plummeted for a second day as traders perceived the likelihood of further military action against Iran diminishing, following a shift towards imposing extensive economic sanctions by the United States. Treasury Secretary Scott Bessent announced the new sanctions, dubbed an "economic D-Day," but refrained from specifying a timeline or naming any additional countries targeted.

The measures were milder than anticipated and were coupled with ongoing negotiations between Pakistan and Iran, with positive outcomes reported on Monday. Pakistani Interior Minister Mohsin Naqvi expressed optimism, stating that the talks would pave the way for lasting peace in the region. This news contributed to a calming effect on oil markets, with prices plunging over three percent and Brent crude falling below $90 a barrel for the first time in weeks.

Wall Street also saw a solid increase, with the S&P 500 gaining 0.3 percent. However, experts cautioned that the markets were possibly overlooking the US-Canada trade dispute, as Canada introduced counter-tariffs on US products ranging from 15 to 50 percent. Financial analysts warned that while there were existing tariffs in place, the new ones were broader and more significant.

European markets mostly rose, except for Paris, which saw a slight dip. Investor confidence was buoyed by Germany reporting stronger-than-expected second-quarter growth. The focus now shifted to Nvidia's upcoming earnings, which are crucial for gauging the performance of the artificial intelligence sector amid mounting expectations.