Oil Prices Fall Over 3% As Markets Weigh Iran Sanctions, Strait Of Hormuz Supply Risks
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Crude Oil Price Today: Oil prices fell over 3% as markets eased concerns over an immediate disruption to crude supplies following fresh US sanctions on Iran, though Strait of Hormuz risks remain a key upside trigger.
Crude Oil Price Today: Oil prices fell more than 3% on Tuesday, extending the previous session's decline as traders assessed the latest US sanctions on Iran and reduced their bets on an immediate disruption to crude supplies from the Middle East.
Brent crude slipped below the $90-a-barrel mark to around $89.25, while US West Texas Intermediate (WTI) crude fell more than 3% to $82.20. Both benchmarks had declined more than 2% on Monday, with WTI settling at a one-week low after investors booked profits following a two-week rally.
Kotak Neo Research said crude prices had fallen to one-week lows, with Brent trading near $88 and WTI around $82, as markets viewed the latest US action against Iran as less threatening to physical oil supplies than a direct military escalation.
The US has expanded economic sanctions on Iran and warned countries against maintaining business ties with Tehran. However, Washington stopped short of announcing immediate penalties, helping ease fears of a wider supply shock.
Why Are Oil Prices Falling?
The latest decline reflects a reduction in the geopolitical premium that had pushed crude higher during the recent rally. Markets are now assessing whether the latest US measures
will actually affect Iran's ability to export oil, rather than assuming an immediate disruption to regional supplies.
US Treasury Secretary Scott Bessent announced an expansion of sanctions on Monday, saying countries doing business with Iran could face consequences, including losing access to the dollar-based financial system. However, he did not identify the countries that could be targeted or give a specific timeline for enforcement.
Iran has threatened to retaliate against the new sanctions while expressing confidence that its major trading partners will resist Washington's pressure. The US, meanwhile, has kept the possibility of military action open, with Defense Secretary Pete Hegseth saying Washington had not ruled out the use of force against Iran.
For now, the absence of a fresh military escalation has taken some pressure off crude prices.
Strait Of Hormuz Remains A Key Risk
The decline in oil prices does not mean supply concerns have disappeared. The Strait of Hormuz remains a major risk for the market, with only two commodity tankers passing through the waterway on Monday, the lowest daily tally since early May.
Around one-fifth of global oil consumption normally passes through the Strait. Any prolonged disruption could therefore quickly tighten global supplies and push crude prices higher.
An oil tanker was also reportedly disabled near Oman on Tuesday after being hit by an unidentified projectile, keeping concerns around shipping activity in the region alive.
The conflict has already led some countries to draw down commercial and strategic oil reserves as they prepare for possible supply disruptions. Separately, the Novoshakhtinsk refinery in Russia's Rostov region suspended operations after being damaged in a drone attack.
Kotak Neo Research sees the reduced geopolitical risk premium and potential weakness in demand as negative factors for crude, while any disruption to shipping through the Strait of Hormuz remains a key upside risk. The research firm's near-term view on crude remains cautious, although a renewed disruption to physical supplies could quickly change the price outlook.
Crude Oil Price: Key Levels To Watch
For MCX Crude Oil September futures, Kotak Neo Commodity Research has identified ₹8,083, ₹8,025 and ₹7,835 as key support levels, while resistance is seen at ₹8,273, ₹8,331 and ₹8,521. The contract was trading around ₹8,178.
The research report also identifies a pivot at ₹8,176.30, with support at ₹8,126.70 and ₹8,075.30, and resistance at ₹8,227.70 and ₹8,277.30.
For now, crude markets appear to be looking beyond the latest sanctions as traders wait for clearer evidence of an impact on actual oil production, exports and shipping flows. A renewed escalation involving Iran or a disruption through the Strait of Hormuz could put the geopolitical premium back into oil prices.
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This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Rochelle Britto has spent 8+ years decoding India's markets, businesses, and consumer economy, reporting for ET Prime and Times Internet along the way, covering the stories behind the numbers.
A Mumbai native and perpetual planner of the next holiday, she stays far, far away from the eternal question, “Where are we going next?” When she's not chasing headlines, she's chasing new cultures, open roads, and a bit of quiet in nature.
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