Oil Prices Plummet as US Shifts to Economic Sanctions Against Iran

Oil prices plummeted by over 3% on Tuesday to a 12-day low after the US announced its shift from military strikes to economic sanctions against Iran. The move is part of what Treasury Secretary Scott Bessent calls an 'economic D-Day' with Washington aiming to inflict maximum financial pressure on Tehran.

Brent futures, the international benchmark, fell 3.3% to $89.14 per barrel, while US West Texas Intermediate crude dropped 3.1% to $82.36 a barrel. The decline in oil prices is part of a broader trend that has seen prices drop by more than 5% this week following the announcement of fresh sanctions on Iran and its 'enablers'.

Treasury Secretary Scott Bessent said last week that the decision to ratchet up economic pressure means a return to war is unlikely for now. However, US Defense Secretary Pete Hegseth left open the possibility of further American strikes in the Middle East, stating that kinetic strikes remain an option if Iran 'overplays their hand'.

Iranian Economy Minister Ali Madanizadeh, however, dismissed the sanctions as a mere warning shot, saying Tehran is 'fully prepared' to withstand more US economic pressure. He added that the government has a two-year plan in place to manage the situation and claimed they have their own tools to deal with the issue.

China, one of Iran's largest trading partners, has vowed to defend its interests and warned against the use of 'economic warfare' as a means to resolve the conflict. Beijing's Foreign Ministry Spokesperson Lin Jian stated that China's cooperation with Iran is conducted within the framework of international law and should not be disrupted.