Oil prices fell ahead of the US announcement of new sanctions on Iran
Oil prices fell by more than $1 a barrel on Monday as profit-taking followed recent gains and as investors awaited details of expected new US sanctions on Iran that could further disrupt supply from the Middle East.
Brent crude futures fell $1.01, or 1.1%, to $93.38 at 1:16 p.m. GMT, while WTI crude dropped $1.42, or 1.6%, to $85.64 a barrel.
Both contracts had posted weekly gains for the second consecutive week, rising more than 5%, following the deadlock in peace talks between the US and Iran.
US Treasury Secretary Scott Bessent, scheduled to hold a press conference at 5:00 p.m. GMT on Monday, threatened to impose "the toughest sanctions in history" on Iran. Trump also threatened to impose sanctions on Iran's trading partners.
If the aforementioned embargo is implemented, oil supplies from the region will decrease, and the US will likely tighten its naval blockade against Iranian oil exports and retaliate with new attacks on Iranian oil facilities in the Middle East.
Iran condemned the US plans to announce new sanctions, and President Pezeshkian called for a diplomatic solution. The Pakistani army commander visited Tehran on Monday for mediation talks before the US announcement.
According to shipping data released on Monday, fewer than 20 commodity ships passed through the Strait of Hormuz over the weekend, as the Iranian and US blockades have restricted passage through this bottleneck for energy shipments.
However, following repeated requests from Baghdad, Iran allowed a number of Iraqi oil tankers to pass through the strait, according to Iran's state news agency IRNA on Saturday.
TotalEnergies oil company said it was profitably transporting oil through the Strait of Hormuz and that high transportation costs were more than offset by large discounts from crude oil producers.
Traders reported that Iraq's SOMO company and QatarEnergy had bid on crude oil shipments to be loaded into the Strait of Hormuz. Iran has approved the passage of tankers carrying Iraqi oil through Hormuz.
The fact that Brent oil prices are around $93 per barrel instead of $120-150 indicates that there is sufficient oil flow through the Strait of Hormuz and the Persian Gulf in general. However, Iran's decision to close the Strait of Hormuz again with rockets and drones could be a turning point.
International Energy Agency (IEA) head Fatih Birol stated on Monday that the agency is not currently discussing a second oil release from strategic reserves.
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