US Sanctions Send Oil Prices Tumbling Below $90

The price of Brent crude futures (OIL) has dropped to around $87-$88 per barrel, down about 3% from previous levels. This decline comes as the US announced new sanctions against Iran, which are seen as a shift in tone from previous military threats.

The US Treasury Secretary Scott Bessent announced direct sanctions against over 70 entities, individuals, and vessels linked to Iran. The list includes 26 mainland China and Hong Kong-based entities and individuals. The new sanctions package targets five key economic pillars for Tehran: shipping, aviation, digital assets, technology, and gold trading.

The market views the US's new stance as more 'talk than action', with no direct economic strike on Beijing or other major partners of Iran. This is seen as discounting the scale of geopolitical risk and creating room for further downside in oil prices.

Iran has threatened a counterattack, while China has warned it may cut off access to pharmaceuticals and rare earths. Pakistan is reportedly preparing another peace offer for the US, while American diplomats plan to return to the Middle East.