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

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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%.

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Weekly Crude Gains Nearly 6% as Hormuz Disruptions, US-Iran Tensions Lift Prices

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