Oil Prices Plummet as US Eyes Tighter Sanctions on Iran

Oil prices declined on Monday, August 24, as investors awaited new US measures aimed at increasing pressure on Iran. The price of Brent crude fell by 1.8% to around $93 a barrel, while West Texas Intermediate (WTI) dropped 2.3% to approximately $85 a barrel.

The decline in oil prices is not necessarily an indication that the risks associated with geopolitics have diminished. In fact, most of the fall on Monday seems related to traders realizing profits from the recent rally seen in the previous week.

US Treasury Secretary Scott Bessent has warned that stricter economic sanctions against Iran are imminent, which could lead to restrictions on Iranian oil shipments and movement of vessels through the Strait of Hormuz. The Strait is a critical waterway where about 20% of the world's oil supplies transit.