Crude oil prices fell on Monday as investors took profits following two consecutive weeks of gains, with Brent crude dropping to $93.17 per barrel ahead of a widely anticipated US announcement of new sanctions against Tehran. US Treasury Secretary Scott Bessent is expected to unveil what Washington has described as an economic D-Day against Iran, targeting Iranian oil exports and financial networks. The move comes as peace talks between the two countries have stalled over oil shipments through the Strait of Hormuz.
Iran Threatens Full Hormuz Blockade
Iran supreme national security council secretary Mohsen Rezaei warned on Monday that Tehran would halt all oil exports through the Strait of Hormuz and the wider Persian Gulf if the United States pressed ahead with fresh sanctions. If the economic war continues, not a single drop of oil will be exported, neither through the Strait of Hormuz nor from anywhere in the Persian Gulf, Rezaei said in a post on X. The Strait of Hormuz, through which roughly 20% of the world oil passes, has been effectively closed since early July after renewed hostilities and maritime disruptions. The IEA August Oil Market Report estimated that Gulf production remained 8.3 million barrels per day below pre-war levels, with global oil supply projected to decline by 4.3 million barrels per day on average in 2026.
Market Deficit Deepens
The global oil balance is now expected to show a deficit of 1.8 million barrels per day in the third quarter, more than double the estimate from last month IEA report. Global observed oil inventories fell by 69 million barrels in July, dropping below 7.9 billion barrels for the first time since April 2025. Cumulative stock draws between February and July reached 410 million barrels. Brent crude futures fell $1.22, or 1.29%, to $93.17 per barrel on Monday. US West Texas Intermediate crude declined $1.20, or 1.38%, to $85.86 per barrel. Both contracts had posted their second consecutive weekly gains last week, rising more than 5% as the Hormuz disruption continued to rattle supply chains. The IEA forecasts global oil demand will decline by 1.6 million barrels per day in 2026 as the ongoing closure of the Strait and elevated fuel prices weigh on consumption. Atlantic Basin refining margins have surged to all-time highs as diesel, jet fuel and gasoline cracks hit record levels amid supply shortfalls and depleted stocks. With inventory buffers rapidly depleting and no agreement on reopening Hormuz in sight, analysts warn the supply outlook remains highly uncertain heading into the final months of the year.
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