Oil Prices Plummet as Traders Reassess US Sanctions on Iran

Oil prices plummeted over 3% on Tuesday, hitting a one-week low as traders reassessed the US sanctions campaign against Iran. The shift in strategy from military conflict to economic pressure has reduced anxiety in the oil market, according to Saxo Bank's head of commodity strategy, Ole Hansen.

The Brent crude futures fell by USD 3.59 or 3.9% to settle at USD 88.58 a barrel, while US West Texas Intermediate crude futures dropped by USD 2.65 or 3.1% to settle at USD 82.36. Treasury Secretary Scott Bessent's announcement of economic measures against Iran was seen as less forceful than expected.

Despite the decline in oil prices, supply disruption risks remain. Tim Waterer, chief market analyst at KCM, noted that Iran still retains the ability to respond by disrupting shipping, which keeps a residual premium in the oil price.