Oil prices fell by more than $1 per barrel on Monday as investors took profits ahead of an expected announcement by the United States on fresh sanctions against Iran, raising concerns over further disruptions to crude supplies from the Middle East.
Brent crude futures declined $1.23, or 1.3 per cent, to $93.16 a barrel by 0329 GMT, while US West Texas Intermediate crude fell $1.36, or 1.6 per cent, to $85.70 per barrel.
The declines came after both benchmarks recorded their second consecutive weekly gains last week, rising by more than five per cent as stalled peace talks between Washington and Tehran heightened concerns about oil shipments through the Strait of Hormuz.
The strategic waterway has historically carried about a fifth of global oil supplies.
US Treasury Secretary Scott Bessent is expected to hold a press conference at 2 p.m. EDT (1800 GMT) on Monday, where he has indicated that Washington could announce what he described as “the toughest sanctions in history” against Iran.
US President Donald Trump has also threatened to sanction countries and entities that continue trading with Tehran.
Iran has condemned the planned sanctions, while President Masoud Pezeshkian has called for a diplomatic solution to the tensions with Washington.
IG Markets analyst Tony Sycamore said the outcome could depend on divisions within Iran’s leadership.
“The more pragmatic members of the Iranian leadership would prefer to de-escalate but the hardliners would probably prefer to fight to the bitter end,” Sycamore said.
“I think by the end of this week we will have a good idea which side of the Iranian leadership has the upper hand.”
Meanwhile, offers of Iranian crude to Chinese buyers have declined and prices have risen as US restrictions have curtailed Tehran’s shipments, according to trade sources.
Iran has, however, allowed some Iraqi oil tankers to transit the Strait of Hormuz following repeated requests from Baghdad.
Analysts expect the restoration of Middle Eastern oil supplies to take longer than initially anticipated if tensions between the United States and Iran persist.
