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Oil Prices Fall Ahead of US, Iran Sanctions

From ThisDay · () English

Summarized and contextualized by DistantNews.

At a glance

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  • Oil prices declined as investors took profits and awaited new U.S. sanctions on Iran.
  • Brent crude futures fell 1.23% to $93.23 a barrel, and U.S. West Texas Intermediate crude dropped 1.78% to $85.51.
  • The market is monitoring potential U.S. sanctions and Iran's response, with analysts forecasting potential price peaks later in the year.

Oil prices dipped on Monday as traders cashed in on recent gains and braced for anticipated U.S. sanctions against Iran. Brent crude futures shed $1.16 to settle at $93.23 a barrel, while U.S. West Texas Intermediate crude lost $1.55, closing at $85.51.

Both benchmarks had posted gains exceeding five percent in the previous week, fueled by stalled U.S.-Iran negotiations that had previously tightened oil shipments through the Strait of Hormuz. This vital waterway accounts for roughly one-fifth of global oil supplies.

the toughest sanctions in history

— Scott BessentThreatening new U.S. measures against Iran.

U.S. Treasury Secretary Scott Bessent is expected to unveil new measures against Iran, potentially the "toughest sanctions in history," according to his prior statements. President Donald Trump has also signaled sanctions against nations trading with Iran. Analysts suggest such an embargo could disrupt regional oil supplies and Iranian exports, potentially leading to retaliatory attacks on Middle Eastern oil facilities.

sufficient oil was still flowing through the Strait of Hormuz.

— Bjarne SchieldropAssessing current market conditions regarding oil transit.

Iran has denounced the planned U.S. sanctions, with President Masoud Pezeshkian advocating for a diplomatic resolution. Pakistan's army chief was in Tehran for mediation talks ahead of the U.S. announcement. Despite concerns, shipping data indicates a steady flow of commodity vessels through the Strait of Hormuz over the weekend, with Iran permitting some Iraqi oil tankers passage following Baghdad's requests. Analysts note that current prices suggest sufficient oil is still transiting the strait, though a complete closure by Iran remains a potential escalation.

Analysts at Morgan Stanley have revised their Brent price forecasts upward, anticipating a potential peak of $100 a barrel in the fourth quarter, citing declining inventories and ongoing Middle East supply concerns. The International Energy Agency, however, is not currently planning to release oil from strategic reserves.

a major turning point could occur if Iran decided to completely close the waterway using rockets and drones.

— Bjarne SchieldropDescribing a potential escalation scenario.
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Originally published by ThisDay. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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