Oil prices eased more than $1 a barrel on Monday as investors booked profits ahead of a US announcement on new sanctions against Iran, with markets weighing the possibility of further disruption to Middle Eastern supplies.Brent crude declined 1.90% to $92.60 a barrel while WTI crude fell 1.96% to $85.35 per barrel, as of 7:30 am IST.The decline came after both benchmarks gained more than 5% last week, marking their second consecutive weekly rises. The gains followed a stalemate in US-Iran peace talks, which had contributed to a sharp reduction in oil shipments through the Strait of Hormuz. The waterway had previously carried a fifth of the world’s oil supply.The latest focus is on Washington’s planned sanctions. US treasury decretary Scott Bessent is scheduled to hold a press conference at 2 pm EDT (1800 GMT) on Monday and has warned of “the toughest sanctions in history” against Iran. US President Donald Trump has also threatened measures against countries trading with Tehran.“But if the US measures do work as intended, Iran’s ability to respond via increased violence becomes a growing risk for energy markets to consider.”Iran has rejected the planned sanctions, while President Masoud Pezeshkian has called for a diplomatic resolution.The impact is already being felt in the country’s oil trade. Trade sources cited by Reuters said that offers of Iranian crude to Chinese buyers had fallen and prices had risen after a US blockade reduced Tehran’s shipments.At the same time, Iran allowed several Iraqi oil tankers to travel through the Strait of Hormuz after repeated requests from Baghdad, according to Iran’s state news agency IRNA.
US threatens wider economic pressure
Washington has described the coming measures as “the greatest financial offensive ever marshalled”, with Iran’s trading partners among those expected to be targeted.Iran has responded by threatening to halt all oil exports from the Gulf if the economic pressure continues.Bessent is expected to outline the measures during Monday’s press conference, as Washington steps up economic pressure on a country that has faced almost continuous sanctions since the 1979 Islamic Revolution.“At dawn begins an economic D-Day — the single greatest financial offensive ever marshalled against an adversary,” Bessent wrote in an opinion piece published in the Financial Times on Sunday.He has also warned countries maintaining economic and financial ties with Iran about the consequences of continuing those relationships, without specifying the measures Washington plans to impose.“They would do well to consider the consequences of sustaining it,” he wrote in the Financial Times.China has also been urged by Bessent to cooperate with the US, particularly as half of its oil imports from the Gulf region come from the region. China’s embassy in Washington said “sanctions and pressure do not help resolve the problem,” while calling for diplomacy.
Iran warns of oil export halt
Iran has spent days preparing for the new sanctions and has issued increasingly strong warnings over its possible response.Earlier on Sunday, Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, said that Tehran could respond economically if the pressure continued.“If the economic war continues, not a single drop of oil will be exported, neither through the Strait of Hormuz nor from anywhere in the Persian Gulf,” Rezaei wrote in a social media post.“Iran will regard any country’s participation in or support for America’s economic war against the Iranian people as an act of war.”Iran’s ability to disrupt energy supplies remains a major concern for oil markets. The country has retained enough missile and drone capability to threaten Gulf neighbours and oil tankers in the Strait of Hormuz, while shipping through the waterway has been brought close to a standstill.The condition of Iran’s nuclear programme remains unknown, while the US and Israel have sought to destroy it.Meanwhile, oil prices have remained volatile as the conflict continues to rage. However, the latest spike is far below the $126 a barrel level seen earlier in the conflict.
