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EMEA Oil Update: Crude Hits Over 1-Week Low as Traders Brush off Washington's Iran Measures

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Crude futures extended a fall on Tuesday to hit a more than one-week low pressured by skepticism over the immediate market impact of the newly-announced US sanctions on Iran.

Brent extended its fall by more than 3% to $89.417 per barrel, while Murban crude futures slumped more than 8% to $93.30/bbl. Both contracts hit their lowest since Mid-August.

"The market seems largely unfazed by Washington's push for tighter economic pressure on Iran, with traders treating the US effort to nudge partners away from Iranian trade as marginal rather than market-moving," ING analysts noted.

Treasury Secretary Scott Bessent unveiled an expansion of sanctions aimed at isolating Iran's economy, warning countries to sever business ties with it or risk exclusion from the dollar-based financial system.

However, analysts noted the absence of a specific timeline for compliance or immediate secondary targets.

"The US announced more than 70 Iran-related sanctions and is threatening secondary sanctions on those that do not cut trading ties with Iran. However, China is the largest buyer of Iranian energy. It remains unclear whether the US would risk a fragile trade truce with Beijing over secondary sanctions," ING analysts noted.

Market strategists emphasized that China remains the pivotal factor, as Beijing is the primary buyer of Iranian energy exports.

According to Rystad Energy senior vice president Jorge Leon, unless China materially reduces its purchases, the direct impact on Iranian oil revenues will remain limited.

Meanwhile, data on Monday showed US Strategic Petroleum Reserve stocks fell by 3.7 million barrels to 289.7 million barrels, hitting their lowest level since November 1982.

Geopolitical shipping risks persisted alongside shifting supply dynamics. Maritime data from Kpler indicated that while total vessel crossings through the Strait of Hormuz edged higher last week, laden transits fell by 27%, underscoring growing commercial caution.

In the Red Sea region, security threats remained elevated after Yemen's Houthi militants targeted a Saudi oil tanker near the port of Yanbu.

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US Oil Update: Crude Falls as Markets Weigh US Economic Pressure on Iran

Crude futures retreated in after-hours trading on Monday after the US unveiled a package of secondary sanctions against Iran, aimed at severing the country's global economic lifelines.Front-month West Texas Intermediate crude fell by 2.4% to $84.97 per barrel, while Brent futures were down 2.5% to $92.04/bbl.Rystad Energy strategists said on Monday that the latest US measures against Iran are unlikely to significantly deepen the hit to the country's oil revenues unless Washington succeeds in persuading China to curb purchases.Trump's administration on Monday rolled out a global sanctions package focused on Iran. The US indicated that China would not be exempt from the strategy, dubbed "Operation Economic Outcast."US Treasury Secretary Scott Bessent on Monday unveiled an "unprecedented" Washington campaign to sever Tehran from the global economy, warning that any state doing business with the country risks facing US sanctions."We are launching an economic onslaught against Iran's financial connections around the globe. Our objective is to sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone," Secretary Bessent said.Treasury's Office of Foreign Assets Control is sanctioning over 60 entities, individuals and vessels worldwide over Iran's procurement of nuclear and missile technology, cyber operations and oil revenue.Bessent said the campaign targets five sectors that the US Treasury identified as vital to Iran's economy: digital assets, technology, gold, aviation and shipping.Iran has condemned the US economic onslaught, with Islamic Revolutionary Guards Corps spokesman warning Washington of heavy strategic blows to its energy bottlenecks and vital interests."Today, America has well understood that if it implements its threats against Iran's infrastructure, it will face heavy strategic blows to its energy bottlenecks and vital interests," IRGC spokesperson Hossein Mohebbi said, according to the state-owned Islamic Republic of Iran Broadcasting.Mohebbi said targeting or threatening individuals would not disrupt Iran's administration because the country's political system rests on strong ties between the government and its people.Gelber & Associates strategists said that the pullback does not mark a return to normal conditions, however, as traffic through the strait remains well below prewar levels and the next round of US sanctions could quickly restore volatility.Meanwhile, Iran's Persian Gulf Strait Authority said on Sunday it had blacklisted 45 tankers for violating its transit rules in the Hormuz, noting that the vessels could face penalties, including "fines, seizure, or confiscation" during future passages.Commercial vessel traffic through the Hormuz and Bab el-Mandeb remained resilient last week, the latest data from Kpler showing 121 crossings, a 2.5% increase from 118 the previous week, while Bab el-Mandeb reported 269 crossings, up 3.1%.

Oil & Energy

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Oil & Energy

US Treasury Targets Iran-Linked Entities Over Hormuz 'Safe Passage,' Expands Secondary Sanctions

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