Oil prices fell on Monday as evidence of improving tanker movements through the Strait of Hormuz provided some relief from fears of prolonged supply disruption, with Iran reportedly allowing a number of Iraqi oil vessels to pass through the critical shipping route.
The New York Post separately reported that shipping activity through the strait had increased substantially over the past fortnight. Nevertheless, traffic continues to operate at only a fraction of the levels seen before the conflict.
The pullback follows strong gains for crude during the previous week. Although improved tanker movements have temporarily eased supply concerns, the prospect of Washington imposing even tougher economic sanctions on Tehran means the risk of further disruption remains elevated.
At 04:32 ET (08:32 GMT), Brent Oil Futures dropped 1.3% to $93.16 a barrel, while WTI/USD declined 1.9% to $85.42. Both benchmarks nevertheless remained more than 5% higher over the previous two weeks.
U.S. Sanctions Threaten to Reignite Oil Market Volatility
The United States is preparing to unveil what officials have described as the toughest sanctions imposed on Iran to date.
U.S. Treasury Secretary Scott Bessent said in an opinion piece for the Financial Times that an “economic D-Day” was approaching for Iran, adding to a series of warnings from Washington about increasing economic pressure on Tehran.
Bessent is expected to provide details of the measures during a press conference at 14:00 ET (18:00 GMT) on Monday.
The planned sanctions come as the confrontation surrounding the Strait of Hormuz remains unresolved, leaving energy markets vulnerable to further geopolitical escalation.
Tehran Warns It Could Stop Persian Gulf Oil Exports
Iran has responded to Washington’s planned measures with renewed threats against regional energy flows.
Mohsen Rezaee, Secretary of Iran’s National Security Council, warned that “not a single drop of oil will be exported” through Hormuz or “anywhere in the Persian Gulf” if the economic conflict continues.
Iranian officials have also warned neighbouring Gulf states against cooperating with the United States.
Such threats keep the possibility of another sharp increase in crude prices firmly in focus, despite Monday’s decline.
Iraqi Tankers Receive Permission to Navigate Hormuz
Iranian media reported over the weekend that Tehran had approved passage through Hormuz for some Iraqi oil tankers following repeated requests from Baghdad.
Details surrounding the number of vessels and the amount of crude involved were not immediately available. Even so, the decision indicates that limited commercial traffic is taking place after the strait had effectively been closed following the start of U.S. hostilities in February.
Shipping activity had slowed dramatically again last week as the U.S.-Iran confrontation continued without any meaningful breakthrough.
Before the conflict, approximately one-fifth of global oil supplies passed through the Strait of Hormuz, making developments surrounding the waterway particularly important for crude prices and the wider global economy.
Red Sea Risks Add Another Layer of Supply Uncertainty
Concerns are no longer confined to the Persian Gulf.
Yemen’s Iran-backed Houthi Group has announced a naval blockade targeting Saudi Arabia, raising the possibility that disruption could spread towards the Red Sea.
Any simultaneous deterioration in shipping conditions across Hormuz and the Red Sea could create substantial additional risks for global energy flows.
While Monday’s resumption of some tanker movements has offered temporary relief, the combination of tougher U.S. sanctions, Iranian export threats and widening regional tensions means the outlook for oil remains highly sensitive to geopolitical developments.
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