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Crude oil prices fell more than 3% on Tuesday to one-week lows as traders played down the latest US sanctions campaign against Iran, saying economic pressure poses less of a risk to oil supplies than a military escalation.
*At 0957 GMT, Brent LCOc1 futures were down US$2.96, or 3.21%, at US$89.21 a barrel, and US West Texas Intermediate (WTI) CLc1 was down US$2.84, or 3.34%, at US$82.17. Both benchmark indices hit their lowest levels since August 17.
The shift from military conflict to economic pressure in war has partly eased oil market unease, he said. Ole Hansenhead of raw materials strategy at Saxo Bankwho added that the announcement of US sanctions was not as forceful as some expected.
The secretary of Treasure, Scott Bessentunveiled the measures on Monday, almost six months after the start of a conflict that the United States has had difficulty resolving. However, he refused to identify the countries that would be subject to the sanctions or specify when they would come into force.
Iran has vowed to retaliate against the sanctions and expressed confidence that its main trading partners will resist Washington’s pressure campaign.
Although the secretary of Defense, Pete Hegsethsaid on Monday that Washington is not ruling out the use of military force, analysts noted that the shift toward economic coercion mitigates concerns about new threats to oil supplies, even though the strategic Strait of Hormuz remains virtually closed.
“Iran continues to retain the ability to respond by disrupting shipping, which continues to maintain a residual premium on the price of oil,” he said. Tim Watererchief market analyst at KCM.
An oil tanker was hit by an unidentified projectile and disabled about nine nautical miles (16.7 kilometers) northeast of Ash Shishah, Oman, on Tuesday, according to the UK Maritime Trade Operations Service.
