Crude Slides as Market Downplays New U.S. Sanctions on Iran

Key Moments

Brent crude futures declined to $91.82 a barrel and U.S. WTI to $84.60, both hitting their weakest levels in about a week by 0810 GMT.
Investors viewed fresh U.S. sanctions measures against Iran as less threatening to near-term oil supply than a potential military escalation.
Physical supply risks lingered, with a tanker hit near Oman and a key Russian refinery halted following a drone strike.

Benchmark Futures Extend Losses

Oil prices moved lower on Tuesday, touching their weakest levels in a week as traders focused on the limited immediate impact of the latest U.S. sanctions move against Iran.

By 0810 GMT, Brent crude futures had slipped 35 cents, or 0.38%, to $91.82 a barrel. U.S. West Texas Intermediate (WTI) crude fell 41 cents, or 0.48%, to $84.60.

Brent crude retreated to its lowest level since August 19, while WTI dropped to its weakest level since August 17.

Contract	Price	Move	Percent Change	Recent Low Reference
Brent crude futures	$91.82	-$0.35	-0.38%	Lowest since August 19
U.S. WTI crude	$84.60	-$0.41	-0.48%	Weakest since August 17

Market Reaction to U.S. Sanctions Threat

According to Saxo Bank head of commodity strategy Ole Hansen, the market has shifted its focus from fears of a widening military conflict to expectations of stronger economic pressure in the U.S.-Israeli war with Iran. He noted that the sanctions announcement was not as aggressive as some participants had anticipated, easing part of the recent geopolitical risk premium in crude.

Iran vowed to respond to the expanded U.S. sanctions that the Trump administration said would cut its economic lifeline, while signaling confidence that key trading partners would resist U.S. efforts to curb their dealings with Tehran.

Washington warned other countries to reduce their business activity with Iran or face possible secondary sanctions, but the U.S. Treasury Department stopped short of actually enforcing penalties at this stage.

U.S. Treasury Secretary Scott Bessent did not specify which countries could be targeted or when any measures might begin, saying he would instead allow time for compliance with the new directive.

U.S. Defense Secretary Pete Hegseth said on Monday that the United States would not exclude the use of military force against Iran, but analysts observed that the current emphasis is on economic coercion. This shift has eased some market worries about additional threats to Middle Eastern oil flows linked to the war.

Persistent Supply and Shipping Risks

Despite the more muted reaction to sanctions, some geopolitical risk remained embedded in oil prices.

“Iran still retains the ability to respond by disrupting shipping, which continues to keep a residual premium in the oil price,” said Tim Waterer, chief market analyst at KCM.

Risks to maritime trade in the region stayed elevated. An oil tanker was hit on Tuesday by an unidentified projectile and disabled about nine nautical miles (16.7 km) northeast of Oman’s Ash Shishah, according to the United Kingdom Maritime Trade Operations.

Shipping data showed that only two tankers passed through the Strait of Hormuz on Monday, the lowest daily number of commodity vessels since early May, with both ships entering the Gulf.

Strait of Hormuz and Inventory Drawdowns

The conflict has intensified concerns over the Strait of Hormuz, a key chokepoint where roughly one-fifth of global oil consumption used to typically transit before the U.S.-Israeli war with Iran began on February 28. That shift has stoked fears of broader supply disruptions.

These disruptions have led countries to tap both commercial and strategic oil inventories to offset reduced flows.

Refinery Outage in Russia Adds to Supply Concerns

Outside the Middle East, supply issues also emerged in Russia. The Novoshakhtinsk oil refinery in the southern Rostov region was damaged overnight by a Ukrainian drone and halted its operations, the regional governor said.