Oil Prices Fall 2.35% Despite New U.S. Sanctions on Iran

Oil prices fell by more than $2 a barrel on Monday despite the United States announcing an expansion of sanctions on Iran, as profit-taking outweighed concerns about tighter supplies following two consecutive weeks of gains.

Brent crude futures settled down $2.22, or 2.35%, at $92.17 a barrel, while U.S. West Texas Intermediate crude, or WTI, fell $2.05, or 2.35%, to $85.01 a barrel, according to oil market data reported by Reuters.

The WTI price and percentage move match the accompanying market snapshot, which shows crude at $85.01, down 2.35%. The snapshot also shows gold rising 0.37% to $4,697.80 an ounce during a session marked by mixed moves across global equity indexes.

In One Minute

• Brent crude settled at $92.17 a barrel, down $2.22.
• Brent and WTI posted the same percentage loss of 2.35%.
• WTI fell $2.05 to $85.01 a barrel.
• The two major benchmarks had gained more than 5% in the previous week.
• Fewer than 20 cargo ships managed to pass through the Strait of Hormuz over the weekend, according to shipping data cited by Reuters.
• Morgan Stanley expects Brent crude to peak at $100 a barrel in the fourth quarter.
• The International Energy Agency is not currently discussing a second release of oil from strategic reserves.

Oil Prices: A 2.35% Drop Defines Monday’s Session

The percentage decline was identical for the two major crude benchmarks, although their losses in dollar terms differed.

At these levels, Brent remained above $90 despite the pullback, while West Texas Intermediate held above $85.

Compared with the previous close of $94.39 for Brent and $87.06 for WTI, the move to $92.17 and $85.01 represents losses of $2.22 for Brent and $2.05 for WTI, matching the reported figures.

Why Did Oil Fall Despite New U.S. Sanctions?

The main contradiction in Monday’s session was that the U.S. announcement, which could have intensified concerns over Iranian supplies, was not enough to push oil prices higher.

U.S. Treasury Secretary Scott Bessent announced an expansion of secondary sanctions on entities and countries that continue doing business with Iran as Washington increased economic pressure on Tehran.

The move came after U.S. President Donald Trump threatened the previous week to intensify economic pressure on Iran.

Investors, however, did not treat the announcement as sufficiently new to sharply alter their expectations, particularly after both crude benchmarks posted strong gains in the previous week.

Profit-Taking Halts Oil’s Rally

Pavel Molchanov, chief investment strategist at Raymond James, said Bessent’s announcement did not contain anything materially new compared with what had already been stated, adding that the strong rise in oil prices during the previous week had set the stage for profit-taking.

Both crude benchmarks had posted gains for a second consecutive week, rising more than 5% last week.

That context is important when assessing Monday’s decline because prices fell after a strong rally rather than after a period of stability.

A decline in a single session, therefore, is not enough on its own to determine whether supply-related pressures have ended or whether the broader market direction has changed.

Iran Sanctions: The Market Is Looking for a Tangible Impact

Monday’s price action shows that the key question for investors is no longer simply whether Washington will impose additional sanctions, but whether those measures can reduce the actual volume of oil reaching the market.

Molchanov said the real test would be whether the United States introduces a measure with a much stronger impact on the Iranian economy than anything the market has previously seen.

Tehran, meanwhile, condemned U.S. plans to impose new sanctions, while Iranian President Masoud Pezeshkian called for a diplomatic solution.

Developments involving Iran, sanctions and export routes will therefore remain among the main factors investors watch when pricing supply risks.

Fewer Than 20 Ships Crossed the Strait of Hormuz

Beyond the sanctions themselves, another figure could prove more significant for the oil market: vessel traffic through the Strait of Hormuz.

Shipping data showed that fewer than 20 cargo ships managed to cross the strait over the weekend despite restrictions imposed by the Iranian and U.S. blockades on navigation through the critical energy shipping route.

That makes the Strait of Hormuz and shipping traffic one of the most important issues that could determine the direction of energy prices in the period ahead.

Markets are not watching political statements alone. They are also monitoring the number of vessels crossing the waterway and the volume of oil actually reaching buyers.

Why Has Brent Not Jumped to $120 or $150?

Despite geopolitical tensions and restrictions on shipping, Brent crude has remained in the $90s rather than surging to much higher levels.

Bjarne Schieldrop, an analyst at SEB, said Brent trading near $93 rather than in a range of $120 to $150 indicates that sufficient volumes of oil are still flowing through the Strait of Hormuz and from the Gulf more broadly.

He said a potential turning point could come if Iran decided to effectively close the strait using missiles and drones.

This highlights the distinction between potential supply risks and an actual large-scale supply disruption. The market can price in risk, but the size of any price move ultimately depends on how much oil actually stops reaching consumers.

Oil Is Still Moving Through Hormuz

Despite restrictions on navigation, oil flows through the strait have not stopped completely.

TotalEnergies Chief Executive Patrick Pouyanné said the company is making money transporting oil through the Strait of Hormuz because steep discounts offered by crude producers have offset higher transportation costs.

At the same time, traders said Iraq’s state-owned oil marketer SOMO and QatarEnergy had issued two tenders to sell crude oil for buyers to load from inside the Strait of Hormuz.

These developments add an important dimension to oil pricing because disruptions in the waterway do not necessarily mean that all flows have stopped.

Morgan Stanley Sees Brent Peaking at $100

Despite Monday’s decline, Morgan Stanley analysts raised their Brent crude forecasts, expecting prices to peak at $100 a barrel in the fourth quarter.

From the settlement price of $92.17, Brent would need to gain $7.83 a barrel to reach $100.

That would represent an increase of about 8.5% from $92.17.

The $100 level is not a current price or a guaranteed outcome. It is a forecast by the bank’s analysts based on current market conditions.

IEA Not Discussing a Second Strategic Reserve Release

In another significant development, International Energy Agency Executive Director Fatih Birol said the agency is not currently discussing a second release of oil from strategic reserves.

The comments are significant because strategic reserve releases are among the tools available to respond to major supply disruptions.

The fact that another release is not currently under discussion does not mean the position could not change later if market conditions or the scale of oil flows change.

Gold Rises as WTI Falls 2.35%

The market snapshot shows a clear divergence between energy and some other assets.

While WTI in the market snapshot fell 2.35% to $85.01 a barrel, gold rose 0.37% to $4,697.80 an ounce.

In equities, the S&P 500 fell 0.28% to 7,652.86 points, while the Nasdaq declined 0.76% to 25,980.19 points.

By contrast, the Dow Jones rose 0.26% to 53,417.16 points, while the FTSE 100 gained 0.35%.

In Asia, the Nikkei 225 fell 0.74% and the Hang Seng dropped 1.89%, while Germany’s DAX declined 0.11%.

These moves do not mean that a single factor drove all asset classes, but they show that the session was not characterized by a uniform move toward or away from risk.

3 Numbers That Explain What Is Happening in the Oil Market

$92.17 — Brent crude’s settlement price after a 2.35% decline.

$85.01 — The price of West Texas Intermediate after losing $2.05.

Fewer than 20 ships — The number of cargo vessels that managed to cross the Strait of Hormuz over the weekend, according to shipping data cited by Reuters.

These figures illustrate the current market equation: oil is experiencing profit-taking, but risks surrounding supply flows through Hormuz have not disappeared.

What Are Investors Watching Now?

The first test will be the actual impact of U.S. sanctions. Announcing new sanctions does not automatically mean additional barrels will disappear from the market, so traders will watch how the measures affect exports and actual trade with Iran.

The second test is vessel traffic through the Strait of Hormuz. Continued flows of sufficient crude volumes could limit the risk premium, while a larger disruption to shipping could alter the supply equation.

The third test will come from prices themselves, particularly Brent’s ability to hold above $90 and the direction of WTI after its decline to $85.01.

Brent and WTI moves and broader oil-market developments will also remain under scrutiny following the strong weekly gains that preceded Monday’s correction.

Conclusion

Oil’s 2.35% decline on Monday does not mean that risks surrounding Iran or the Strait of Hormuz have disappeared. It does, however, show that investors did not see enough of a surprise in the announced U.S. sanctions to keep prices rising after two weeks of gains.

Brent settled at $92.17 a barrel after losing $2.22, while West Texas Intermediate fell $2.05 to $85.01.

Actual oil flows through the Strait of Hormuz remain more important than headlines alone. As long as sufficient volumes of crude continue to reach the market, prices may remain below the most extreme scenarios, while any larger supply disruption could quickly alter pricing.

The question therefore shifts from “Are there new sanctions?” to one that matters more to the market: How many barrels will these measures actually prevent from reaching buyers?

Frequently Asked Questions

What is the latest Brent crude price?

Brent crude futures settled at $92.17 a barrel, down $2.22, or 2.35%.

What is the latest WTI crude price?

U.S. West Texas Intermediate crude was at $85.01 a barrel, down $2.05, or 2.35%.

Why did oil fall despite sanctions on Iran?

Investors took profits following the strong gains recorded by oil in the previous week, while the market did not view the announced U.S. measures as a sufficiently new development to sharply alter supply expectations.

Has oil stopped moving through the Strait of Hormuz?

No. The data showed that some vessel traffic and oil flows continued despite significant restrictions on navigation. Shipping data indicated that fewer than 20 cargo ships managed to cross the strait over the weekend.

Could Brent reach $100?

Morgan Stanley analysts raised their Brent crude forecast, expecting it to peak at $100 a barrel in the fourth quarter. This is a forecast, not a confirmed or current price.

What is the most important factor the oil market is watching now?

Alongside U.S. sanctions, actual flows through the Strait of Hormuz and the volume of exports available to the market remain among the most important factors investors are monitoring.

Sources

• Reuters — Oil prices, Iran sanctions and Strait of Hormuz developments
• Bloomberg — Crude oil futures market data