Brent drops below $94 a barrel as investors weigh potential supply disruptions and rising Middle East tensions
Singapore: Oil prices fell more than US$1 a barrel on Monday as investors locked in profits ahead of an expected announcement by the United States on new sanctions targeting Iran, raising fresh concerns about energy supplies from the Middle East.
Brent crude futures declined US$1.23, or 1.3%, to US$93.16 a barrel, while US West Texas Intermediate (WTI) crude fell US$1.36, or 1.6%, to US$85.70 a barrel.
Despite Monday’s decline, both benchmarks recorded gains of more than 5% last week amid concerns over disruptions to oil shipments through the Strait of Hormuz following a stalemate in US-Iran peace talks.
US Treasury Secretary Scott Bessent is expected to announce additional sanctions on Iran later on Monday, having previously warned of imposing what he described as the “toughest sanctions in history” on Tehran. US President Donald Trump has also threatened sanctions against Iran’s trading partners.
Analysts said markets are assessing whether the proposed measures will significantly curb Iranian oil exports and further tighten global supplies.
Vivek Dhar, a commodities analyst at Commonwealth Bank of Australia, said it remains unclear whether US efforts to economically isolate Iran will achieve their intended objective.
He warned that if the sanctions prove effective, the risk of a stronger response from Tehran could become an increasing concern for global energy markets.
Iran has criticised Washington’s plans to impose new sanctions, although Iranian President Masoud Pezeshkian has continued to call for a diplomatic solution to the dispute.
Tony Sycamore, market analyst at IG, said divisions within the Iranian leadership could influence the direction of the crisis.
Offers of Iranian crude to Chinese buyers have reportedly declined and prices have risen as restrictions on shipments tighten, according to trade sources.
Meanwhile, Iran has authorised a number of Iraqi oil tankers to transit through the Strait of Hormuz following repeated requests from Baghdad, according to state news agency IRNA.
Analysts at Morgan Stanley said global oil supplies continue to tighten, noting declines in both floating and onshore inventories, including in China.
The bank said exports from the Middle East have fallen back towards levels recorded in March and April, prompting it to slow its expectations for a recovery in regional oil supplies.
Source: Emirates 24|7