US Sanctions Threaten to Spark Oil Price Volatility
Oil prices fell on Monday as investors took profits ahead of an expected announcement from Washington about imposing more sanctions on Iran. The US Treasury Secretary is set to hold a press conference at 2 p.m. EDT, where he will discuss new measures aimed at disrupting supplies from the Middle East.
The Brent crude futures price dropped $1.22, or 1.29%, to $93.17 by 0035 GMT, while US West Texas Intermediate crude fell to $85.86 a barrel, down $1.20, or 1.38%. Both contracts posted their second weekly gains last week, up more than 5%, as peace talks between the US and Iran stalled.
Analysts warn that if the US measures are effective in isolating Iran economically, it could lead to increased violence and disrupt energy markets further. However, some Iranian leaders have expressed a desire for a diplomatic solution.
A trade source noted that offers of Iranian crude to Chinese buyers have declined, causing prices to jump. Meanwhile, Iran has granted permission for Iraqi oil tankers to pass through the Strait following repeated requests from Baghdad.