Oil prices fell more than $2 a barrel on Monday as the U.S. expanded secondary sanctions targeting entities trading with Iran, though analysts questioned the measures’ immediate impact on global supply.
Brent crude futures closed down $2.22, or 2.35%, at $92.17 per barrel, while U.S. West Texas Intermediate crude dropped $2.05, or 2.35%, to $85.01. Both contracts had posted weekly gains of more than 5% the prior week.
U.S. Treasury Secretary Scott Bessent announced the expansion of secondary sanctions, following President Trump’s warning of an "unprecedented scale" of economic pressure on Iran. Tehran condemned the move, with President Masoud Pezeshkian calling for diplomacy. Pakistani Army Chief’s visit to Tehran for mediation talks on Monday preceded the U.S. announcement.
Analysts noted that the market’s reaction reflected profit-taking after last week’s gains. Pavel Molchanov, an investment strategy analyst at Raymond James, said the U.S. measures lacked new details beyond prior disclosures. "Will the White House propose something never attempted before with a far more powerful effect on Iran’s economy? We’ll believe it when we see it," he said.
Jorge Leon, head of geopolitical analysis at Rystad Energy, highlighted the challenge of enforcing sanctions amid ongoing trade. "The real question is how aggressively Washington will apply secondary sanctions against Iran’s remaining commercial partners," he said. "Unless China significantly reduces its purchases, the additional impact on Iranian oil revenues may be limited."
Bjarne Schieldrop, an analyst at SEB, attributed Brent’s decline to adequate supply flows through the Strait of Hormuz and Persian Gulf. "A Brent price of $93 instead of $120-$150 suggests sufficient oil is moving through the region," he said.
Transport data showed fewer than 20 cargo ships transited the Strait of Hormuz over the weekend due to blockages by Iran and the U.S. restricting energy shipments. The strait, which historically carries one-fifth of global oil supply, remains a critical chokepoint despite current disruptions.
Patrick Pouyanne, CEO of TotalEnergies, said the company was continuing to transport oil profitably through the strait. Higher transport costs were offset by discounts from oil producers, he noted. Iraq’s Somo and QatarEnergy also offered oil for loading inside the strait via tenders.
The International Energy Agency’s director, Fatih Birol, said the agency was not discussing a second release of oil from strategic reserves on Monday.
Morgan Stanley analysts raised their Brent price forecast, projecting a peak of $100 per barrel in the fourth quarter.
