KEY POINTS
- Brent fell 1.64% to $92.84 a barrel, while WTI dropped 2.34% to $85.02.
- Investors are awaiting tougher US sanctions on Iran that could further restrict Iranian oil exports.
- Morgan Stanley expects Brent could reach $100 a barrel in the fourth quarter if Middle East supply disruptions persist.
Oil prices fell by more than $1 a barrel on Monday as investors took profits following a two-week rally and waited for details of new US sanctions expected to target Iran.
Brent crude futures dropped $1.55, or 1.64%, to $92.84 a barrel by 0911 GMT, while US West Texas Intermediate (WTI) crude fell $2.04, or 2.34%, to $85.02.
Despite the decline, both benchmarks recorded their second consecutive weekly gains last week, rising by more than 5% as stalled peace negotiations between the United States and Iran heightened concerns about disruptions to oil supplies from the Middle East.
US prepares tougher sanctions on Iran
The market is closely watching an expected announcement by US Treasury Secretary Scott Bessent, who is scheduled to outline additional sanctions against Iran on Monday.
Bessent has warned that Washington could impose what he described as the “toughest sanctions in history” on Tehran. US President Donald Trump has also threatened sanctions against countries and companies that continue to trade with Iran.
The measures have raised concerns that Iranian oil exports could be further restricted, potentially reducing supplies available to international markets.
Analysts said the prospect of a broader US economic campaign against Iran is adding uncertainty to an already fragile oil market.
A key source of market anxiety is the Strait of Hormuz, one of the world’s most important oil shipping routes.
The waterway, located between Iran and Oman, has traditionally handled roughly one-fifth of global oil supplies. However, shipping activity has dropped sharply amid restrictions linked to the confrontation between Iran and the United States.
Fewer than 20 commodity vessels crossed the strait over the weekend, according to shipping data, highlighting the extent to which restrictions have affected the movement of energy cargoes.
