Oil prices fell by more than 1% on Monday as investors took profits ahead of an expected US announcement on additional sanctions against Iran, which could further disrupt supplies from the Middle East.
Brent crude futures fell $1.22, or 1.29%, to $93.17 a barrel by 0035 GMT, while US West Texas Intermediate crude dropped $1.20, or 1.38%, to $85.86 a barrel.
Both benchmarks posted weekly gains for a second consecutive week last week, rising more than 5%, as talks between the United States and Iran remained deadlocked. The impasse has restricted oil shipments through the Strait of Hormuz, through which roughly one-fifth of global oil supplies normally pass.
US Treasury Secretary Scott Bessent has threatened to impose “the toughest sanctions ever” on Iran and is scheduled to hold a news conference at 2 p.m. Eastern Time (1800 GMT) on Monday. US President Donald Trump has also threatened sanctions against Iran’s trading partners.
“It is unclear whether the US policy of economically isolating Iran will prove effective,” said Vivek Dhar, commodities analyst at the Commonwealth Bank of Australia, in a note.
“But if US measures achieve their intended objective, Iran’s ability to respond with further violence will become an increasing risk that energy markets will need to take into account,” he added.
Tehran has condemned Washington’s plans to announce new sanctions, even as Iranian President Masoud Pezeshkian has called for a diplomatic solution.
“More pragmatic members of the Iranian leadership favor de-escalation, but hardliners may prefer to fight to the bitter end,” said Tony Sycamore, a market analyst at IG.
“I think by the end of this week we will have a clear idea of which side of the Iranian leadership has the upper hand,” he added.
The volume of Iranian crude available to Chinese buyers has declined and prices have risen as the US blockade has reduced shipments from Tehran, according to trading sources.
However, Iran’s state news agency IRNA reported on Saturday that Tehran had authorized several Iraqi oil tankers to pass through the Strait of Hormuz following repeated requests from Baghdad.
Source: Reuters
