Oil prices slipped on Monday as markets braced for details of what Washington is billing as the most sweeping US sanctions on Iran ever attempted, with the Trump administration formally launching what it is calling an unprecedented financial campaign against Tehran. The move sent both major oil benchmarks lower as traders weighed whether the pressure would work and what Iran might do in response.
West Texas Intermediate futures, the US oil benchmark, fell around 1.62% to $85.65 a barrel, while Brent crude, the international benchmark, dropped 1.38% to $93.09 a barrel.
Bessent calls it an ‘economic D-Day’
US Treasury Secretary Scott Bessent unveiled the new sanctions package on Monday, framing it in stark terms. ‘At dawn begins an economic D-Day, the single greatest financial offensive ever marshaled against an adversary,’ Bessent wrote in a post on X.
Bessent had signalled the move to CNBC last week, saying Washington intends to ‘collapse’ the Islamic Republic with the ‘toughest sanctions in history.’ The Trump administration is pressing US allies and other countries to cut economic ties with Tehran entirely. President Donald Trump had also warned of steep financial penalties for any country that helps Iran evade the measures, describing the effort as ‘Economic Warfare and Isolation on an unprecedented scale.’
According to NBC News, the Trump administration is calling the campaign ‘Operation Economic Outcast,’ a label that underscores just how far Washington intends to push its effort to isolate Tehran from global trade and finance.
Tehran pushes back against the US sanctions on Iran
Iran has not taken the threats quietly. The Islamic Revolutionary Guard Corps said Tehran has ways ‘to counter the adverse effects of the enemy’s war’ and can ‘easily establish economic relations with countries,’ according to Iranian state media. The response suggests Tehran is preparing to weather the pressure rather than capitulate to it, though how effective any workarounds might prove remains an open question.
The standoff places energy markets in an awkward position. Oil traders must now assess two competing scenarios: one in which the sanctions succeed and Iranian crude is squeezed out of global supply, and another in which the pressure fails, Iran retaliates, and flows through one of the world’s most critical waterways are threatened.
What analysts expect for oil prices
The Commonwealth Bank of Australia (CBA) addressed both possibilities in a note published on Monday. ‘It is unclear whether U.S. policy to economically isolate Iran will prove effective. But if the US measures do work as intended, Iran’s ability to respond via increased violence becomes a growing risk for energy markets to consider,’ CBA wrote.
The bank expects Brent crude to trade between $70 and $100 a barrel in the second half of the year, a wide range that reflects just how much uncertainty surrounds the outcome. CBA added that prices could fall toward the bottom of that band if oil flows through the Strait of Hormuz recover even modestly, estimating that just 50% to 60% of pre-war quantities passing through the strait would be enough to revive expectations of an oversupplied global market.
That combination of a hard-line US posture, an Iranian pledge to find workarounds, and an oil market caught between the two scenarios is likely to keep prices swinging. CBA said it expects oil to remain volatile through the second half of the year as markets wait to see whether Washington’s push to economically isolate Iran translates into real disruption to Iranian exports.
The full scope of the sanctions package and which countries or entities are targeted will become clearer as Bessent’s announcement is unpacked in the coming hours and days.
