Oil prices slipped more than $1 a barrel today as investors took profits after recent gains and awaited details of expected new US sanctions on Iran, which could further disrupt supplies from the Middle East.
Brent crude futures were down $1.01, or 1.1%, to $93.38 this afternoon, while US West Texas Intermediate crude was at $85.64 a barrel, down $1.42, or 1.6%.
Both contracts posted a second consecutive weekly gain last week, rising more than 5%, as peace negotiations between the US and Iran stalled, constraining oil shipments through the Strait of Hormuz, a route that once carried a fifth of global supplies.
US Treasury Secretary Scott Bessent, who is set to hold a press conference later today, has threatened to impose “the toughest sanctions in history” on Iran. President Donald Trump has also threatened to impose sanctions on Iran’s trading partners.
“Should the pledged embargo be launched, oil supply from the region will fall,” said PVM analyst Tamas Varga, adding that the US would likely tighten its naval blockade against Iranian oil exports and that Iran could retaliate with fresh strikes against oil installations in the Middle East.
Iran has condemned US plans to announce new sanctions and President Masoud Pezeshkian has called for a diplomatic solution. Pakistan’s army chief was visiting Tehran today for mediation talks, ahead of the US announcement.
Fewer than 20 commodity vessels transited the Strait of Hormuz at the weekend, shipping data showed today, as Iranian and US blockades restrict traffic through the chokepoint for energy shipments.
However, Iran has granted permission for a number of Iraqi oil tankers to pass through the strait following repeated requests from Baghdad, Iran’s state news agency IRNA reported over the weekend.
TotalEnergies chief executive Patrick Pouyanne said the oil company was profitably moving oil through the Strait of Hormuz, with higher transport costs more than offset by steep discounts from crude producers.
Iraq’s SOMO and QatarEnergy both offered crude for loading inside the strait in tenders, traders said.
“$93 per barrel Brent, rather than $120-150, is telling us that enough oil is flowing through the Strait of Hormuz and from the Persian Gulf in general,” SEB analyst Bjarne Schieldrop told Reuters, adding that a turning point could be if Iran decided to actually close Hormuz with rockets and drones.
Brent has climbed back up to around $92 per barrel, from as low as $71 in June, due to inventory draws and a growing sense that Middle East disruptions can last longer, Morgan Stanley analysts said in a note.
The bank increased its Brent forecasts, projecting a peak at $100 in the fourth quarter.
The International Energy Agency is not currently discussing a second release of oil from strategic reserves, its chief Fatih Birol said today.
