Oil Prices Plunge Below $90 as US Imposes Sanctions on Iran

Crude oil prices have dipped below $90 per barrel after falling around 3% due to reports that the US is likely to rely on sanctions rather than further military action against Iran. The Brent crude futures (OIL) are trading in the $87-$88 range, while WTI crude (OIL.WTI) has fallen 3.4% to $82.

The US Treasury Department announced direct sanctions against over 70 Iran-related entities, individuals, and vessels, including 26 mainland China and Hong Kong-based entities and individuals. The new sanctions package focuses on five key economic pillars for Tehran: shipping, aviation, digital assets, technology, and gold trading.

While the sanctions may seem like another phase of an endless war, they significantly discount the scale of geopolitical risk and Washington's overall strategy creates room for further downside in oil. The market views Washington's new stance as more 'talk than action', and without secondary sanctions on Iran's key partners, an economic D-Day is unlikely to disrupt the oil market significantly.

The technical analysis suggests that Brent crude futures (OIL) remain under clear selling pressure, testing a key support zone on the daily chart. The 14-day RSI sits at a neutral 50.3 points, leaving ample room for bears to operate.