Iran Sanctions Package Selloff Fails to Ease Strait of Hormuz Supply Concerns

The US sanctions package targeting Iran hit the oil market on Tuesday, prompting an immediate selloff. The operation, dubbed 'Economic Outcast,' came with tough language and no enforcement dates specified.

Traders who had been positioning for an aggressive crackdown pulled out of 'war premium' contracts, causing prices to drop. However, concerns about supply risks in the Strait of Hormuz kept oil markets from plummeting further.

The Strait is still operating at near-shutdown volumes, with strategic reserves sitting at levels not seen in four decades.