Oil Prices Drop as US Prepares New Sanctions on Iran

Oil prices slipped on Monday as markets braced for a new round of US sanctions on Iran. Brent crude fell around 1.3% to near $93 a barrel while West Texas Intermediate dropped about 1.6% to near $86.

US Treasury Secretary Scott Bessent was set to unveil the measures Monday afternoon with calling it Washington's strongest economic offensive against Tehran to date. President Donald Trump has also warned of severe penalties for nations helping Iran dodge sanctions.

Iran has pushed back with the Islamic Revolutionary Guard Corps insisting the country can withstand the pressure and maintain trade ties elsewhere. Meanwhile President Masoud Pezeshkian called for a diplomatic resolution though analysts note internal division between Iranian leaders who favor negotiation and hardliners resistant to compromise.

Both Brent and WTI posted back-to-back weekly gains last week amid stalled US-Iran talks which disrupted flows through the Strait of Hormuz a corridor once carrying a fifth of global oil supply.

Commonwealth Bank of Australia said Brent could trade between $70 and $100 through the second half of 2026 cautioning that success in isolating Iran economically could raise risks of retaliatory disruption while any partial recovery in regional oil flows might ease prices instead.

Trade sources say Iranian crude offers to Chinese buyers have thinned as the US squeeze tightens though Iran has allowed some Iraqi tankers through the Strait after requests from Baghdad. Morgan Stanley analysts noted a sharp drop in oil-on-water supply and falling inventories also suggesting a slower-than-expected recovery in Middle East exports as the standoff continues.