Oil prices dropped to a one-week low on Tuesday after traders shrugged off the latest US sanctions threat against Iran, viewing economic pressure as posing less risk to supply than a military escalation. Brent crude fell to $91.82 a barrel and WTI to $84.60.
Oil prices fell to a one-week low on Tuesday as traders shrugged off the latest US sanctions threat against Iran, viewing economic pressure as posing less risk to oil supplies than a military escalation. Brent crude futures fell 35 cents, or 0.38%, to $91.82 a barrel by 0810 GMT, while US West Texas Intermediate crude was down 41 cents, or 0.48%, at $84.60.
Brent touched its lowest level since August 19, while WTI hit its weakest since August 17. According to Reuters: "continues to keep a residual premium in the oil price", said Tim Waterer, chief market analyst at KCM, describing Iran's remaining ability to disrupt shipping.
Sanctions announcement seen as less forceful than feared
Saxo Bank head of commodity strategy Ole Hansen said the shift from military escalation to economic pressure in the US-Israeli war with Iran has eased some of the market's anxiety, adding that the US sanctions announcement was not as forceful as the market had feared. Iran promised to retaliate against the expanded sanctions, with Tehran voicing confidence that major trading partners would resist Washington's pressure campaign.
Washington warned countries to cut business ties with Iran or risk secondary sanctions, though the Treasury Department stopped short of actually imposing penalties. Treasury Secretary Scott Bessent declined to identify the countries that would be targeted or reveal when penalties would take effect, saying he would instead give them time to comply. Defense Secretary Pete Hegseth said Monday the US would not rule out military force against Iran. Yet analysts said Washington's turn toward economic coercion eased concerns about further threats to Middle Eastern crude oil supply from the war.
Shipping risks persist in the Gulf
Risks to shipping in the region remain. An oil tanker was struck by an unidentified projectile and disabled about nine nautical miles (16.7 km) northeast of Oman's Ash Shishah on Tuesday, the United Kingdom Maritime Trade Operations said. Just two tankers transited the Strait of Hormuz on Monday, the lowest daily tally of commodity vessels since early May, with both entering the Gulf.
The conflict has heightened concerns over the Strait of Hormuz, the waterway through which roughly one-fifth of global oil consumption used to typically pass before the US-Israeli war with Iran began on February 28. The supply disruptions have prompted countries to draw down commercial and strategic oil reserves. The Novoshakhtinsk oil refinery in Russia's southern Rostov region was damaged by a Ukrainian drone overnight and suspended its operations, the regional governor said.
Source: Investing.com
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