Oil Prices Fall More Than $1 as US Considers ‘D-Day’ Iran Sanctions; The risks of maritime transport in the Strait of Hormuz are the focus of attention

Oil prices fell more than $1 a barrel on Monday as investors booked profits ahead of a U.S. announcement on new sanctions against Iran, while markets weighed the possibility of further disruption to Middle East supplies.Brent crude oil fell 1.90% to $92.60 a barrel, while WTI crude oil fell 1.96% to $85.35 a barrel, at 7:30 am IST.The drop came after both benchmark indices gained more than 5% last week, marking their second consecutive weekly rise. The progress came after a stalemate in peace talks between the United States and Iran, which had contributed to a sharp reduction in oil shipments through the Strait of Hormuz. Previously, the waterway carried a fifth of the world’s oil supply.The latest attention is focused on the sanctions planned by Washington. US Treasury Secretary Scott Bessent is scheduled to hold a press conference at 2:00 p.m. EDT (6:00 p.m. GMT) on Monday and has warned of “the toughest sanctions in history” against Iran. US President Donald Trump has also threatened measures against countries that trade with Tehran.“But if US measures work as planned, Iran’s ability to respond with further violence becomes a growing risk that energy markets must consider.”Iran has rejected the planned sanctions, while President Masoud Pezeshkian has called for a diplomatic resolution.The impact is already being felt in the country’s oil trade. Trading sources cited by Reuters said offers of Iranian crude to Chinese buyers had fallen and prices had risen after a US blockade reduced shipments from Tehran.At the same time, Iran allowed several Iraqi oil tankers to travel through the Strait of Hormuz after repeated requests from Baghdad, according to Iran’s state news agency IRNA.

US threatens broader economic pressure

Washington has described the upcoming measures as “the largest financial offensive ever carried out”, and Iran’s trading partners are expected to be among the targets.Iran has responded by threatening to halt all Gulf oil exports if economic pressure continues.Bessent is expected to outline the measures during Monday’s news conference, as Washington ramps up economic pressure on a country that has faced near-continuous sanctions since the 1979 Islamic Revolution.“At dawn begins economic D-Day: the largest financial offensive ever directed against an adversary,” Bessent wrote in an op-ed published in the Financial Times on Sunday.It has also warned countries that maintain economic and financial ties with Iran about the consequences of continuing those relations, without specifying the measures that Washington plans to impose.“They would do well to consider the consequences of maintaining it,” he wrote in the Financial Times.Bessent has also urged China to cooperate with the United States, particularly since half of its oil imports from the Gulf region come from the region. China’s embassy in Washington said “sanctions and pressure do not help solve the problem,” while calling for diplomacy.

Iran warns of halting oil exports

Iran has been preparing for new sanctions for days and has issued increasingly strong warnings about its possible response.Earlier on Sunday, Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, said Tehran could respond economically if the pressure continued.“If the economic war continues, not a single drop of oil will be exported, neither through the Strait of Hormuz nor from anywhere in the Persian Gulf,” Rezaei wrote in a social media post.“Iran will consider any country’s participation in or support for the United States’ economic war against the Iranian people as an act of war.”Iran’s ability to disrupt energy supplies remains a major concern for oil markets. The country has retained enough missile and drone capability to threaten its Gulf neighbors and oil tankers in the Strait of Hormuz, while shipping through the waterway is nearly paralyzed.The status of Iran’s nuclear program remains unknown, while the United States and Israel have sought to destroy it.Meanwhile, oil prices have remained volatile as the conflict continues. However, the latest rally is well below the $126 per barrel level seen earlier in the conflict.