US Sanctions on Iran Send Oil Prices Tumbling
Oil prices dropped significantly on Monday as investors took profits after recent gains and shrugged off new US sanctions on Iran. The Brent crude futures settled down USD 2.22, or 2.35%, to USD 92.17, while US West Texas Intermediate crude fell USD 2.05 a barrel, down 2.35% at USD 85.01.
US Treasury Secretary Scott Bessent announced an expansion of secondary sanctions that can be imposed on entities and countries maintaining business ties with Iran worldwide. This move follows President Trump's threats of 'economic warfare and isolation on an unprecedented scale' against Tehran last week.
Raymond James Investment Strategy Analyst Pavel Molchanov stated, 'There is not much new that came out of Bessent’s commentary, beyond what was telegraphed in advance.' He added that the oil market had rallied quite a bit last week, leading to profit-taking today. Both contracts posted a second consecutive weekly gain last week, rising more than 5%.
Morgan Stanley analysts have increased their Brent forecasts, projecting a peak of USD 100 per barrel in the fourth quarter. The International Energy Agency is not currently discussing a second release of oil from strategic reserves, according to its chief Fatih Birol.