Oil prices fell on Friday, cooling slightly from one-month highs, after the U.S. said it will impose its strictest ever economic sanctions on Iran.
Brent crude futures, the global oil benchmark, had fallen 0.2% to $93.57 a barrel by 04:11 ET (08:11 GMT), while U.S. West Texas Intermediate crude futures dropped 0.4% to $86.50 a barrel.
But crude was on track for a second week of strong gains as a standoff between the U.S. and Iran over the Strait of Hormuz showed few signs of lifting. The Brent contract, in particular, was on pace to rise more than 5% this week.
Crude’s gains come as U.S. President Donald Trump has threatened to impose strict new economic sanctions against Iran to pressure the country into accepting a peace deal. Trump also warned dire economic consequences for countries doing business with Tehran.
U.S. Treasury Secretary Scott Bessent reiterated Trump’s comments on Thursday, stating that Iran would be subject to the “toughest sanctions in history.”
However, Iran has largely dismissed U.S. threats of more economic sanctions, as did China, which is a major buyer of Iranian crude.
It was not immediately clear what the new sanctions will entail, given that the U.S. has already imposed restrictions on Iran’s oil exports. The U.S. also maintained its naval blockade against Iran, which was imposed earlier this year.
Still, Trump’s rhetoric pointed to little easing in Middle East tensions, which, in turn, are expected to maintain recent disruptions to regional oil supplies. In a note to clients, analysts at Deutsche Bank said “worries of an energy shock are continuing to permeate markets.”
Shipping data showed commercial traffic through the Strait of Hormuz, a vital waterway that has become a key flashpoint in the Iran war, remained at a fraction of pre-conflict levels, despite U.S. claims to the contrary. Iran signaled it will keep the chokepoint effectively closed until the U.S. adheres to the terms of a now-expired interim peace deal signed in June.
Source: Investing.com
