Oil falls as U.S. pressure on Iran grows

Highlights

Brent fell 1.5% while WTI declined 1.7%.
Both benchmarks gained more than 5% last week.
Washington is preparing additional Iran sanctions.
Middle East crude supplies remain constrained.

Brent crude futures are trading at around $91.26 a barrel, down 1.52%, while WTI futures are near $85.57, having lost 1.71%. The decline came ahead of Washington’s planned announcement of additional measures against Tehran, Reuters reported. The U.S. is preparing a broader financial campaign targeting Iran and countries that maintain economic ties with it.

Traders take profits after a weekly rally

The pullback follows a strong run for crude. Both benchmarks gained more than 5% last week as the prolonged U.S.-Iran confrontation reduced confidence that Middle East oil shipments would normalize soon.

Monday’s decline, therefore, reflects profit-taking rather than a clear improvement in the supply outlook. Iranian crude availability for Chinese buyers has already tightened, while broader Middle East exports remain below levels seen earlier in the year.

U.S. Treasury Secretary Scott Bessent is expected to outline new sanctions designed to increase economic pressure on Tehran. Washington has also warned that countries continuing to support Iranian trade could face consequences, potentially widening the impact beyond Iran itself.

Iran has pushed back against the planned measures and warned of economic retaliation. Although direct military exchanges have eased in recent weeks, the absence of meaningful progress toward a settlement keeps the risk of renewed disruption embedded in energy markets.

Supply risks remain in focus

The physical crude market continues to show signs of tightening. Morgan Stanley analysts noted that oil held at sea has declined sharply in recent weeks, while onshore inventories have also fallen, including in China.

Middle East exports are a particular concern. Regional shipments have fallen back toward levels last recorded in March and April, complicating expectations for a faster recovery in supply.

There are limited signs of movement in the opposite direction. Iran has permitted some Iraqi tankers to transit through the Strait of Hormuz following requests from Baghdad. That offers some relief but does not resolve the broader uncertainty surrounding regional energy flows.

Sanctions keep a risk premium in crude

The central question for oil markets is whether Washington’s latest measures will materially reduce Iranian exports or provoke retaliation that disrupts regional shipments further.

That uncertainty helps explain why crude remains elevated despite Monday’s decline. With Brent still above $90 and physical supply indicators tightening, traders continue to attach a substantial premium to uncertainty surrounding Middle East exports.

A prolonged confrontation could keep that premium in place. Conversely, signs of diplomatic progress or a sustained recovery in regional shipments would remove one of the strongest supports for crude prices.

As we previously reported, Hormuz tensions rise after U.S.-Iran talks expire.

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