Oil prices fall as markets await new US sanctions on Iran

Oil markets edged lower on Monday as investors adopted a cautious stance ahead of the unveiling of a major US sanctions package aimed at Iran. West Texas Intermediate futures dropped approximately 1.3% to $85.93 per barrel, while Brent crude fell 1.24% to $93.22, reflecting market uncertainty over the potential impact of Washington's toughest-ever economic campaign against Tehran.

Unprecedented sanctions campaign

US Treasury Secretary Scott Bessent is scheduled to announce the measures later Monday, having previously declared that "at dawn begins an economic D-Day — the single greatest financial offensive ever marshaled against an adversary." President Donald Trump has similarly threatened the "most crushing economic operation ever taken against any country," warning of severe penalties for nations that assist Iran in circumventing sanctions. Tehran has dismissed the pressure, with the Islamic Revolutionary Guard Corps asserting that Iran has strategies to counter the economic war and can maintain trade relations with other nations.

Volatile outlook for oil markets

The Commonwealth Bank of Australia (CBA) projected that oil prices are likely to remain volatile through the second half of 2026, with Brent expected to trade within a $70–$100 range. "It is unclear whether US policy to economically isolate Iran will prove effective," the bank noted in a Monday analysis. "But if the US measures do work as intended, Iran's ability to respond via increased violence becomes a growing risk for energy markets to consider." The bank also suggested that even a partial recovery in oil flows through the Strait of Hormuz could push prices toward the lower end of its forecast range, reviving expectations of a global supply surplus.