Oil dips as traders weigh US economic pressure on Iran
This follows the US’ announcement of a campaign to isolate Iran from the global economy
Published Tue, Aug 25, 2026 · 06:10 AM
OIL fell after US Treasury Secretary Scott Bessent announced what he called an “unprecedented” campaign to isolate Iran from the global economy, as the US seeks to pressure Teheran to loosen its grip on the Strait of Hormuz.
West Texas Intermediate declined 2.4 per cent to settle near US$85 a barrel, while Brent closed around US$92 after adding about 13 per cent over the past two weeks.
Bessent had raised expectations about the pressure campaign on Iran by likening new sanctions to the Normandy landings that helped bring an end to World War II, but prices were little changed after the press conference on Monday (Aug 24).
Trading volumes remained thin and Bessent declined to set a timeline for US actions or say what specifically the administration was planning as the Iran war, now in its sixth month, continues to snarl global energy flows.
Bessent warned that any state doing business with Iran risks US sanctions and that US President Donald Trump is calling world leaders with “specific requests to cease their interactions with the regime”.
He added that a major institution is expected to be targeted by the end of this week.
Iran has itself proven adept at weathering economic pressure in the past and said it has a two-year plan.
Teheran is “is fully prepared for these developments”, Economy Minister Seyed Ali Madanizadeh told state TV, while admitting the economic pressure does damage its economy.
“The biggest oil market risk may not be the sanctions themselves, but Iran’s response to them,” Jorge Leon, head of geopolitical analysis at Rystad Energy said in a note.
“There may be relatively little additional Iranian oil left for sanctions to remove, but Iran still has considerable capacity to disrupt everybody else’s exports. The relatively muted oil-price reaction so far suggests the market is making the same distinction.”
After the press conference, the Treasury Department detailed sanctions on 60 entities, individuals and vessels globally that it says enable Iran’s illicit nuclear and missile technology procurement.
Global oil prices have rallied more than 50 per cent in 2026 so far amid the war.
Some barrels have continued to flow out of the strait, with shipments robust so far in August.
Axios reported at the weekend that about 16 million barrels of oil crossed the waterway in a single night at the end of last week.
That would be a significant proportion of normal flows, though shipments can be lumpy as a result of convoy formations, meaning it is likely a high-end estimate.
As the White House grows impatient to end a conflict unpopular among voters ahead of midterm elections in November, it is not clear exactly how much more the US could ramp up economic pressure on Teheran.
One option could be going after China, the main buyer of the Opec producer’s crude, and risk blowback.
Asked on Monday if the US was prepared to target major Chinese banks for facilitating trade with Iran, Bessent said “no one is above the reach of US sanctions”.
Still, he did not mention China or any other country by name, saying the best way to engage was through quiet diplomacy.
The boss of major European refiner TotalEnergies said at a conference on Monday that with cargoes moving quietly through the waterway, there is a bearish outlook for crude oil, though scarcity of refined fuels means prices for those products could continue to rise.
The market for oil products has tightened as risks to shipping have imperiled transits through Hormuz and the Red Sea, at the same time that Ukrainian drone attacks have limited fuel supplies from Russia.
Earlier on Monday, Yemen’s Houthis attacked a Saudi supertanker in the Red Sea, the latest in a string of actions after the Iran-backed group said it would enforce a blockade on the kingdom in retaliation for a Saudi operation against Yemen’s ports.
In an indication of how higher prices may be reducing fuel demand, China’s top refiner Sinopec said gasoline consumption fell almost 8 per cent and diesel use 12 per cent in the first half of 2026 because of high prices and increased use of electric vehicles. BLOOMBERG
