Oil Extends Decline Despite Tougher US Sanctions on Iran, WTI Near $85

Oil extended its decline even after the US tightened economic sanctions on Iran.

According to Bloomberg on Aug. 24, West Texas Intermediate traded near $85 a barrel after dropping more than 2% in the previous session. Brent settled that session at around $92 a barrel.

US Treasury Secretary Scott Bessent said countries doing business with Iran must sever economic ties within a set period or face unilateral US sanctions. He described the move as an “economic D-Day” for Iran.

The Treasury Department’s Office of Foreign Assets Control sanctioned about 60 entities and individuals, including Iran’s oil revenue network and a shadow fleet that transports crude and petroleum products. In response, Iranian Economy Minister Seyed Ali Madanizadeh said on state television that the country is “fully prepared” for what he called a new US economic offensive.

International oil prices have climbed more than 50% this year. The rise has been driven by six months of war that has continued to disrupt shipments of crude and refined products across the Middle East. It remains unclear whether the US sanctions will ease those pressures while Iran is restricting energy transit through the Strait of Hormuz. Another variable is the potential for tensions to escalate between China, the biggest buyer of Iranian crude, and the US.

Risks to energy transport in the Middle East also remain high. Yemen’s Iran-backed Houthi rebels said they fired a ballistic missile at a Saudi very large crude carrier sailing in the Red Sea. The group has previously attacked vessels passing through the Bab el-Mandeb Strait, a key oil shipping route at the southern end of the Red Sea.