OIL prices retreated on Monday after a strong weekly rally as investors took profits ahead of an expected US announcement on tougher sanctions against Iran, while ongoing disruptions to Iranian crude shipments and reduced traffic through the Strait of Hormuz kept supply risks firmly in focus.
Brent crude fell to around US$93 a barrel, while US crude slipped to about US$86, following substantial gains last week.
The decline came as traders awaited details of Washington’s latest measures against Tehran, with US Treasury Secretary Scott Bessent saying the United States would impose what he described as the “toughest” sanctions in history.
The measures are expected to intensify economic pressure on Iran and countries continuing to trade with it, as Washington seeks to further isolate Tehran from the global financial system.
The sanctions could put additional pressure on already constrained global oil supplies, with Iranian shipments severely disrupted and offers to Chinese buyers reportedly declining amid the US blockade.
Iran has dismissed the latest sanctions threat as another failed attempt to force it into submission, saying it has decades of experience dealing with economic blockades.
Tehran has also maintained that it can withstand further pressure while preserving trade and economic relations with other countries.
At the same time, tensions around the Strait of Hormuz remain elevated, with shipping traffic through the strategic waterway still well below normal levels.
The disruption has heightened sensitivity in oil markets because the Strait of Hormuz is a critical transit route for global energy supplies. Any further deterioration could tighten markets and push crude prices higher.
Concurrently, the broader market picture was also shaped by continued weakness in the US dollar, with the dollar index holding around 98.8 on Monday after recording significant losses last week.
The greenback came under pressure as rising US Treasury yields heightened concerns over the government’s mounting debt burden and reduced the dollar’s appeal.
Bessent has also outlined a debt-buyback strategy he described as a “Treasury twist”, under which the US government would repurchase longer-dated Treasury securities in an effort to influence the yield curve and manage borrowing costs.
Investors are now turning to key US economic indicators and Federal Reserve signals, including the July personal consumption expenditures inflation report and comments from Fed Chair Kevin Warsh at the Jackson Hole economic symposium later this week.
With Middle East tensions, oil supply disruptions, US fiscal concerns and the Federal Reserve’s policy outlook all in play, markets are likely to remain volatile in the coming days. - August 24, 2026
