Oil Edges Toward $94 Amid Looming U.S. Sanctions on Iran
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Crude oil prices are on track for a weekly gain as market participants await the unveiling of a new U.S. economic campaign designed to isolate Iran. The ongoing conflict, which has severely disrupted Middle East energy exports, shows no signs of easing.
Treasury Secretary Scott Bessent announced that the administration will release specifics of the strategy on Monday, following President Donald Trump’s description of the initiative as an “economic D-day.” These impending measures will target Tehran and may also penalize nations that continue to trade with Iran, including China.
Brent crude, the international benchmark, held near $94 per barrel, heading for a weekly rise of approximately 6%. Meanwhile, West Texas Intermediate (WTI) hovered near $87 per barrel after marking five straight days of gains.
Oil prices have surged more than 50% this year due to the U.S.-Iran conflict, which has severely hampered Middle East energy flows as both nations contest control of the critical Strait of Hormuz. In a CNBC interview, Bessent asserted that Washington controls the waterway, noting that vessels can exit through a southern lane. Conversely, Tehran maintains that it holds authority over the strait, where further vessel attacks were reported this week.
The Trump administration’s latest threat of economic pressure follows months of military operations and a U.S. naval blockade of Iranian ports. However, because Iran has already endured years of international sanctions, analysts question the effectiveness of additional measures. Arne Lohmann Rasmussen, chief analyst at AS Global Risk Management, noted that the market views Iran as unlikely to capitulate after decades of sanctions, suggesting the new measures may only prolong the standoff.
China, the primary buyer of Iranian crude, reiterated its stance that sanctions are ineffective and urged a diplomatic resolution. In response, Bessent pointed out China’s heavy reliance on Middle Eastern energy, suggesting it would benefit Beijing to cooperate with the U.S. initiative. However, Josh Lipsky of the Atlantic Council expressed skepticism, questioning how the U.S. could tighten financial restrictions on Iran further without provoking significant pushback from China.
Crude prices temporarily pulled back from their daily highs after semi-official Iranian media quoted President Masoud Pezeshkian suggesting that Iran should seek an end to the conflict from a position of strength and dignity. Pezeshkian remains one of the prominent figures in Tehran advocating for a diplomatic resolution.
Meanwhile, global energy supplies face further strain from Russia, where Ukrainian strikes on refineries and ports have disrupted oil operations and tightened global diesel markets. In the U.S., retail diesel prices climbed past $5.55 a gallon this week, marking their highest level since late May. Consequently, the refining margin for producing diesel from crude oil surged to a record high of over $100 a barrel.
Additionally, a weakening U.S. dollar, which is heading toward its lowest close since May, has provided further support to dollar-denominated commodities like crude oil.
