Iran Sanctions Send Oil Prices Plummeting Amid Lower War Odds

Oil prices dropped to a one-week low on Tuesday after Washington unveiled its most sweeping sanctions campaign against Iran on record.

West Texas Intermediate traded near $82.35 a barrel by 7:38 a.m. ET, down 3.2% below Monday's settlement around $84.89. Brent crude for October fell 2.92% to $89.48.

The market is pricing the odds that the war restarts lower, and every headline since Monday afternoon has pushed those odds lower.

Saxo Bank commodity strategy head Ole Hansen said the pivot from military escalation to economic pressure has drained some of the market's supply anxiety, noting the package landed softer than traders had feared.

He added that 'traders increasingly focused on signs that the immediate risk of another major escalation in the U.S.-Iran conflict may be receding.'

The sanctions package unveiled by Treasury Secretary Scott Bessent set the tone, but its enforcement was deferred. He did not name which of Iran's trading partners face secondary penalties, or say when.