Global oil prices declined by more than $1 on Monday as traders took profits following recent gains and awaited new sanctions the United States is expected to impose on Iran.
By 11:31 a.m. GMT, Brent crude futures had fallen $1.16, or 1.23 per cent, to $93.23 per barrel, while West Texas Intermediate (WTI) dropped $1.55, or 1.78 per cent, to $85.51 per barrel.
The decline came after both benchmarks recorded their second consecutive weekly gain, with prices rising by more than five per cent last week.
Iran sanctions create fresh market uncertainty
The recent rally has been linked to stalled peace negotiations between the U.S. and Iran, which have contributed to disruptions affecting oil shipments through the Strait of Hormuz.
The strategic waterway previously carried roughly one-fifth of global oil supplies and remains a critical route for international energy shipments.
U.S. Treasury Secretary Scott Bessent was expected to announce additional measures against Iran later on Monday.
Bessent has previously warned that Washington could impose what he described as the toughest sanctions ever placed on Iran.
U.S. President Donald Trump has also threatened sanctions against countries that continue trading with Tehran.
Iran could retaliate, analyst warns
PVM analyst Tamas Varga said a potential embargo could reduce regional oil supplies and result in tighter restrictions on Iranian crude exports.
He warned that Iran could respond by targeting oil infrastructure in the Middle East, potentially worsening supply concerns and pushing prices higher.
Iran has condemned the planned U.S. measures, while Iranian President Masoud Pezeshkian has advocated a diplomatic solution to the dispute.
Pakistan’s army chief was also in Tehran on Monday for mediation discussions ahead of the expected U.S. announcement.
Strait of Hormuz remains key to oil outlook
Shipping data indicated that fewer than 20 commodity vessels passed through the Strait of Hormuz over the weekend amid restrictions affecting energy shipments.
Iran, however, permitted some Iraqi oil tankers to cross the waterway after repeated requests from Baghdad, according to Iranian state news agency IRNA.
Iraq’s SOMO and QatarEnergy had also offered crude for loading within the strait, traders said.
SEB analyst Bjarne Schieldrop said the current Brent price suggested that significant volumes of oil were still moving through the strategic waterway.
However, he warned that the market could face a major shift if Iran moved to completely shut the strait using rockets and drones.
Brent could reach $100
Brent crude has climbed from about $71 per barrel in June to around $92, driven by declining inventories and concerns about prolonged disruptions in the Middle East.
Analysts at Morgan Stanley have raised their Brent price forecasts and now expect prices could reach $100 per barrel in the fourth quarter.
Despite the renewed supply concerns, the International Energy Agency (IEA) is not currently considering another release of oil from strategic reserves, according to its Executive Director, Fatih Birol.
