Oil prices moved sharply lower on Monday after signs of increased shipping activity through the Strait of Hormuz reduced some concerns about Middle Eastern supply disruptions, with Iran reportedly permitting several Iraqi oil tankers to transit the strategically important waterway.
Separately, the New York Post reported that shipping traffic through Hormuz had risen considerably during the previous two weeks. However, activity remained well below the levels recorded before the conflict.
Crude entered Monday following strong gains over the previous week, while the prospect of tougher U.S. sanctions against Iran continues to create the potential for renewed supply disruption and further volatility across global energy markets.
At 04:32 ET (08:32 GMT), Brent Oil Futures were down 1.3% at $93.16 a barrel, while WTI/USD declined 1.9% to $85.42. Despite Monday’s losses, both benchmarks remained more than 5% higher over the previous two weeks.
Bessent Promises “economic D-Day” as Iran Threatens Oil Exports
Washington is preparing to announce what it says will be its toughest sanctions package against Iran to date. U.S. Treasury Secretary Scott Bessent wrote in an opinion piece for the Financial Times that an “economic D-Day” was approaching for Tehran.
His comments follow warnings from several U.S. officials, including President Donald Trump, about intensifying economic pressure on Iran as the confrontation surrounding the Strait of Hormuz continues.
Bessent is expected to reveal details of the sanctions during a press conference scheduled for 14:00 ET (18:00 GMT) on Monday.
Mohsen Rezaee, Secretary of Iran’s National Security Council, responded by warning that “not a single drop of oil will be exported” through Hormuz or “anywhere in the Persian Gulf” if the economic confrontation continues. Iranian officials have also cautioned neighbouring Gulf countries against cooperating with Washington.
Iran Permits Some Iraqi Oil Tankers to Cross Hormuz
Iranian media reported over the weekend that Tehran had allowed an unspecified number of Iraqi oil tankers to travel through the Strait of Hormuz following repeated requests from Baghdad.
Neither the number of vessels involved nor the volume of crude being transported was immediately disclosed. Nevertheless, the development suggests that some shipping activity is returning after Iran had effectively blocked the waterway following the start of U.S. hostilities in February.
Commercial traffic through Hormuz had slowed dramatically during the previous week as the confrontation between Washington and Tehran showed little sign of resolution.
The strait remains central to global energy markets because approximately 20% of the world’s oil supply passed through the route before the U.S.-Iran conflict. Investors have therefore continued to price in the possibility of further disruption, particularly after Washington signalled that the confrontation could be prolonged.
Risks are also extending beyond the Persian Gulf. Yemen’s Iran-backed Houthi Group has announced a naval blockade against Saudi Arabia, increasing concerns that disruption could spread into the Red Sea and affect another important global shipping corridor.