Economy
Oil Prices Fall 3% as Traders Shrug Off US Sanctions on Iran
By Adedapo Adesanya
Oil prices went down more than 3 per cent on Tuesday as traders shrugged off the latest sanctions campaign against Iran by the United States, viewing economic pressure as less risky for oil supplies than a military escalation.
Brent crude futures declined by $3.59 or 3.9 per cent to $88.58 a barrel, while US West Texas Intermediate (WTI) crude futures fell by $2.65 or 3.1 per cent to $82.36 per barrel.
Market analysts noted that the shift from military confrontation to economic pressure in the US-Israeli war with Iran has eased some concerns in the oil market.
Treasury Secretary Scott Bessent unveiled the measures on Monday, almost six months into the war, but declined to identify countries targeted or say when penalties would take effect, adding he would give countries time to comply.
In return, Iran vowed to retaliate against the American sanctions and expressed confidence that major trading partners would resist the US’ pressure campaign.
On its part, China, the largest buyer of Iranian oil, said on Tuesday its cooperation with Iran was conducted within the framework of international law and should not be interfered with.
It was projected that if the US maritime blockade of Iran continues, China could run out of Iranian options by October.
The economic pressure campaign has revived expectations of talks between the US and Iran to resolve their conflict, which began when the US and Israel launched military strikes on Iran at the end of February.
This also comes as Iran and Oman said they had discussed a proposal on Tuesday for a “joint temporary navigational corridor” through the Strait of Hormuz and a plan to clear the strait of mines. The waterway is bordered and controlled by Iran to the north, and Oman (via the Musandam Peninsula) on the southern coastline.
Reuters reported that just two tankers transited the Strait of Hormuz on Monday, the lowest daily tally of commodity vessels since early May, with both entering the Gulf, citing shipping data.
The American Petroleum Institute (API) estimated that crude oil inventories in the United States rose by 4.2 million barrels in the week ending August 21. Official data from the US Energy Information Administration (EIA) will be released later on Wednesday.
