Oil Falls Ahead of US Move on Record Iran Sanctions; WTI Drops 1.3%

Oil prices fell as markets awaited a US announcement of what officials have described as the largest-ever round of economic sanctions targeting Iran.

CNBC reported on August 23 that West Texas Intermediate futures dropped about 1.3% from the previous session to $85.93 a barrel. Brent crude, the international benchmark, fell 1.24% to $93.22 a barrel.

Traders are watching for additional Iran sanctions due later in the day from US Treasury Secretary Scott Bessent. In a post on X, Bessent wrote that an "economic D-Day" would begin at dawn and called it the largest financial offensive ever mobilized against an enemy nation. He has also said the US aims to cripple Iran's economy through what he described as the strongest sanctions in history.

President Donald Trump said last week that the US would carry out the most powerful economic operation ever imposed on any country against Iran. He also said countries helping Iran evade sanctions would face severe economic penalties, increasing pressure on allies and other nations to cut economic ties with Tehran.

Iran, however, said the US pressure campaign would be difficult to make effective. The Islamic Revolutionary Guard Corps said through state media that it has the means to offset the damage from Washington's economic war and can maintain economic relations with other countries.

Commonwealth Bank of Australia said oil-price volatility could increase in the second half of the year depending on how effectively the US isolates Iran's economy and how Tehran responds. The bank said it remains unclear whether Washington's strategy will work. If the sanctions operate as intended, however, a broader Iranian military response could emerge as a new risk factor for energy markets.

CBA expects Brent crude to trade in a range of $70 to $100 a barrel in the second half of this year. The bank said prices could fall toward the lower end of that range if crude shipments through the Strait of Hormuz recover to just 50% to 60% of prewar levels, reviving concerns about a global oil surplus.