Oil prices fell more than $1 on Monday as traders prepared for tougher U.S. measures against Iran. Iran sanctions pressure has added fresh uncertainty to an already fragile energy market. Investors also took profits after crude prices recorded strong gains last week.
Brent crude futures dropped $1.23, or 1.3%, to $93.16 per barrel. U.S. West Texas Intermediate crude fell $1.36, or 1.6%, to $85.70. Both benchmarks gained more than 5% last week. The gains came as diplomatic efforts between Washington and Tehran stalled.
The latest market moves reflect growing concerns about regional supply disruptions. The Strait of Hormuz remains a major focus for energy traders. Around one-fifth of global oil supplies traditionally pass through the waterway. Any prolonged disruption could place additional pressure on international crude markets.
U.S. Treasury Secretary Scott Bessent plans to address the issue during a Monday press conference. Washington has indicated that it could introduce severe new sanctions against Iran. President Donald Trump has also warned about penalties targeting Iran’s trading partners. Those measures could further restrict Tehran’s ability to sell crude internationally.
Analysts remain divided over whether tougher economic measures will achieve Washington’s objectives. Some expect sanctions to reduce Iranian exports and tighten global supplies. Others warn that stronger pressure could encourage Iran to respond through regional escalation. Iran sanctions pressure therefore presents risks beyond the immediate impact on exports.
Iran has rejected Washington’s planned measures. President Masoud Pezeshkian has continued to call for a diplomatic path. However, disagreements within Iran’s leadership could shape the next phase of the crisis. Market analysts are watching closely for signs that negotiations could resume or deteriorate further.
Iranian crude supplies to Chinese buyers have already shown signs of weakness. Trade sources say offers have declined as restrictions affect Tehran’s shipments. Prices for available Iranian barrels have also increased. China remains an important destination for Iranian oil exports.
Meanwhile, Iran has allowed several Iraqi oil tankers to cross the Strait of Hormuz. Iran’s state news agency reported the move after repeated requests from Baghdad. The decision could provide limited relief for Iraqi shipments. However, it does not remove wider concerns surrounding regional energy flows.
Morgan Stanley analysts also pointed to tighter crude availability across key markets. Oil stored on vessels has declined sharply in recent weeks. Onshore inventories have also fallen, including in China. The analysts said Middle Eastern exports have returned toward levels seen earlier this year.
That trend could delay expectations for a broader recovery in regional supplies. Traders will now focus on Washington’s sanctions announcement and Iran’s response. Iran sanctions pressure could keep volatility elevated across crude markets. Investors may also watch the Strait of Hormuz for any sign of further disruption.