Oil prices steadied on Tuesday, after falling more than 2% in the previous session, as investors assessed the impact of harsher U.S. secondary sanctions against Iran. The U.S. Treasury Secretary Scott Bessent unveiled an expansion of sanctions to cut off Iran's economic lifeline, forcing countries to sever their business ties or risk being cut out of the dollar-based financial system.
Oil Prices Hold Steady Amid US-Iran Tensions
Brent crude futures were down 9 cents, or 0.1%, at $92.16 by 0104 GMT, while U.S. West Texas Intermediate crude was up 1 cent at $85.02 a barrel. Both contracts fell more than 2% on Monday, with U.S. crude oil falling to a one-week low on profit-taking after prices rallied over the previous two weeks.
The harsher sanctions, which were announced on Monday, have removed concerns about threats to Middle Eastern oil supply because of the war, according to Tim Waterer, chief market analyst at KCM. "Markets appear to be pricing economic pressure as a lower-risk path for physical supply than kinetic action, which is why the initial reaction was for oil to move lower rather than spike higher," Waterer said.
Strait of Hormuz Disruptions Continue
Iran still maintains that it should control the Strait of Hormuz, which typically carried cargoes accounting for about 20% of global oil trade before the war started in February. On Monday, it named 45 tankers that had broken its rules on crossing the strait and threatened action against them, up to globalizing their cargoes.
An oil tanker was struck on Tuesday by an unidentified projectile and disabled about 9 nautical miles northeast of Oman's Ash Shishah, the United Kingdom Maritime Trade Operations said. This incident highlights the ongoing threat of disruptions to oil supplies through the Strait of Hormuz.
US Crude Oil Reserves Fall to Lowest Level Since 1982
The supply disruptions as a result of the U.S.-Israeli war on Iran have caused countries to draw down their commercial and strategic reserves. On Monday, the Department of Energy reported that stocks of crude oil in the U.S. Strategic Petroleum Reserve fell by about 3.7 million barrels to 289.7 million barrels last week, the lowest since November 1982.
The falling oil reserves and ongoing tensions in the region are likely to continue to affect oil prices in the coming weeks. As investors assess the impact of the sanctions and the ongoing conflict, oil prices may remain volatile.
Source: Joy Online
