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Oil Prices Decline Amid US Sanctions on Iran
Oil prices fell by more than $2 a barrel on Monday as traders took profits following recent gains, despite the announcement of new US sanctions against Iran. Brent crude settled down approximately 2.3% to around $92, while West Texas Intermediate (WTI) dropped to near $85. Both benchmarks had experienced significant increases over the previous two weeks, each rising more than 5%.
The decline in oil prices occurred after US Treasury Secretary Scott Bessent announced an expansion of secondary sanctions targeting entities and countries conducting business with Iran. This move is part of a broader strategy, termed 'Operation Economic Outcast,' which has already sanctioned nearly 60 Iran-linked entities and individuals across various sectors, including oil and nuclear activities. Analysts noted that the market had largely anticipated these sanctions, leading to profit-taking rather than new buying activity.
While the sanctions aim to isolate Iran economically, the effectiveness of these measures will depend on how aggressively the US enforces them, particularly against Iran's key trading partner, China. Shipping traffic through the Strait of Hormuz remains limited, with fewer than 20 vessels transiting over the weekend. Despite this, TotalEnergies reported it continues to transport crude through the strait profitably, aided by discounts from producers. Looking ahead, Morgan Stanley has raised its Brent price forecast for the fourth quarter to around $100 a barrel, although the International Energy Agency has indicated it is not considering further releases from strategic reserves.
Source: KLEA News