Economy
Crude Oil Falls 2% as Profit-Taking Overshadows Iran Sanctions
By Adedapo Adesanya
Crude oil slipped more than $2 a barrel on Monday as investors took profits after recent gains and shrugged off new sanctions on Iran by the United States, which would have lifted prices.
Brent crude futures declined by $2.22 or 2.35 per cent to $92.17 per barrel, while the US West Texas Intermediate (WTI) crude futures fell by $2.05 or 2.35 per cent to $85.01 per barrel.
The US on Monday announced an expansion of secondary sanctions it can impose on entities and countries that maintain business ties with Iran around the world as it significantly ramps up economic pressure on Iran with the war nearing its 6-month mark.
The Donald Trump administration revealed the details of its “economic D-Day” campaign against Iran, targeting nearly 60 individuals, entities and vessels in the first round of new measures.
Treasury Secretary Scott Bessent on Monday formally launched Operation Economic Outcast, giving countries a defined, but unspecified, timeline to shut down Iran-related activity identified by the US. The Treasury said countries that fail to comply will face US action, while entities facilitating Iranian money laundering or sanctions evasion risk being cut off from the U.S. financial system.
Market analysts said this may impact China, which buys more than 80 per cent of Iran’s seaborne oil, but the US stopped short Monday of sanctioning the larger Chinese banks that may facilitate those purchases.
Iranian crude availability in China is already declining under the US blockade, with Chinese imports estimated at 534,000 barrels per day in August, down from 823,000 barrels per day in July, according to Reuters.
Iran condemned the American plans with its President Masoud Pezeshkian calling for a diplomatic solution as Pakistan’s army chief visited Tehran on Monday for mediation talks, ahead of the US announcement.
Meanwhile, oil shipments through the Strait of Hormuz, a route that once carried a fifth of global supplies, remained constrained.
Fewer than 20 commodity vessels transited the waterway at the weekend, shipping data showed on Monday, as Iranian and US blockades restrict traffic through the chokepoint for energy shipments.
Morgan Stanley analysts have increased their Brent forecasts, projecting a peak of $100 per barrel in the fourth quarter.
The head of the International Energy Agency (IEA), Mr Fatih Birol, disclosed that the agency is not currently discussing a second release of oil from strategic reserves.
