Oil prices steady after sharp sell-off as Iran sanctions take focus

August 25, 2026 (MLN): Oil prices steadied on Tuesday after falling more than 2% in the previous session, as investors weighed the potential impact of tougher U.S. secondary sanctions aimed at increasing economic pressure on Iran.

Currently, Brent crude futures is down, 1.64%, at $92.84 per barrel, according to data by Mettis Global.

West Texas Intermediate (WTI) crude futures is down by $0.27, or 0.32%, to $85.09 per barrel by [10:00 am] PST.

Both major oil benchmarks declined by over 2% on Monday, with U.S. crude falling to a one-week low as investors locked in profits following a strong rally over the past two weeks.

U.S. Treasury Secretary Scott Bessent declared an expansion of sanctions on Monday, seeking to further restrict Iran’s economic activity and pressure Tehran to end the ongoing conflict.

Countries continuing business ties with Iran could face restrictions on access to the dollar-based financial system, according to CNBC.

However, Bessent did not disclose which countries could face penalties or provide a timeline for their implementation, indicating that affected nations would be given time to comply.

The shift toward economic measures helped ease immediate concerns over potential disruptions to Middle Eastern oil supplies. U.S. Defense Secretary Pete Hegseth, meanwhile, said Washington had not ruled out the use of military force against Iran.

Market participants viewed economic pressure as posing a lower immediate threat to physical oil supplies compared with direct military action, although concerns over possible disruptions to shipping continued to support prices.

The risks were emphasized on Tuesday when an oil tanker was struck by an unidentified projectile and disabled around 9 nautical miles northeast of Oman’s Ash Shishah, according to the United Kingdom Maritime Trade Operations.

Iran has continued to assert its control over the Strait of Hormuz, a key global shipping route that handled cargo equivalent to around 20% of worldwide oil consumption before the conflict began in February.

Tehran has also identified 45 tankers it accused of violating its transit rules through the waterway and warned that action could include the confiscation of cargoes.

Supply disruptions linked to the U.S.-Israeli war with Iran, which began on February 28, have also forced countries to draw on commercial and strategic oil reserves.

Meanwhile, U.S. crude oil inventories in the Strategic Petroleum Reserve fell by around 3.7 million barrels to 289.7 million barrels last week, their lowest level since November 1982, according to the Department of Energy.

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