KEY POINTS
- Brent crude held around $92 a barrel after Monday’s 2% decline.
- US sanctions against Iran have been expanded, increasing pressure on its oil trade.
- Shipping risks and falling US strategic reserves continue to threaten global oil supplies.
Oil prices stabilised on Tuesday after falling sharply in the previous session, as investors weighed the possible impact of expanded US sanctions on Iran against the risk of further disruptions to crude supplies in the Middle East.
Brent crude futures slipped 9 cents, or 0.1%, to $92.16 a barrel by 0104 GMT, while US West Texas Intermediate (WTI) crude gained 1 cent to $85.02 per barrel.
Both benchmarks had dropped more than 2% on Monday, with US crude falling to a one-week low as traders took profits following a strong rally over the preceding two weeks.
The latest price movement reflects growing uncertainty over how the United States’ tougher economic measures against Iran will affect global oil prices and supplies and shipping through key regional routes.
US expands sanctions pressure on Iran
US Treasury Secretary Scott Bessent announced on Monday that Washington would broaden its sanctions against Iran in an effort to weaken the country’s economy and pressure it to end the ongoing conflict.
Under the expanded measures, countries and businesses dealing with Iran could face restrictions from the US financial system, including losing access to the dollar-based international financial network.
Bessent did not disclose which countries would be targeted or when the penalties would begin. He said affected parties would be given time to comply with the new requirements.
The announcement initially eased some concerns in the oil prices and its market because investors viewed economic sanctions as less likely to immediately disrupt physical crude supplies than direct military action.
US Defence Secretary Pete Hegseth said Washington had not ruled out military action against Iran. However, the administration’s increased focus on economic pressure has reduced some fears of an immediate escalation that could severely affect Middle Eastern oil production and exports.
KCM chief market analyst Tim Waterer said markets appeared to see economic pressure as a lower-risk option for physical oil supplies than military confrontation.
However, he warned that Iran still has the ability to disrupt shipping, meaning some risk premium remains embedded in oil prices.
