Oil prices fall despite U.S. rolling out global sanctions focused on Iran

Oil prices fell Monday, even after the U.S. rolled out what has been described as its toughest-ever sanctions campaign against Iran. 

West Texas Intermediate futures, the U.S. benchmark, declined about 2.5% to $84.89 per barrel. Brent crude, the international benchmark, lost 2.5% to $92.06 a barrel.  

President Donald Trump’s administration on Monday rolled out a global sanctions plan focused on Iran. The U.S. indicated that China would not exempt from the strategy, which has been dubbed “Operation Economic Outcast.”

U.S. Treasury Secretary Scott Bessent had earlier described it as an “economic D-Day” on social media. He also called it “the single greatest financial offensive ever marshaled against an adversary.”

“Those who fear the danger of defying Tehran ought not to discount the cost of testing Washington,” Bessent said on X.

Bessent told CNBC last week that Washington intends to “collapse” the Islamic Republic with the “toughest sanctions in history,” as the Trump administration pushes U.S. allies and other countries to cut economic ties with Tehran.

The announcement follows President Donald Trump’s threat last week to launch the “most crushing economic operation ever taken against any country” against Iran. Trump also warned of steep financial penalties for countries that help Tehran evade sanctions, calling the effort “Economic Warfare and Isolation on an unprecedented scale.”

WTI and Brent prices both jumped last week following the announcement, meaning investors could be taking profit in Monday’s session.

Iran has pushed back against the threats. 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.

Commonwealth Bank of Australia expects oil prices to remain volatile in the second half of the year as markets weigh whether Washington’s push to economically isolate Iran will succeed and how Tehran could respond.

“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 in a note on Monday.

CBA also expects Brent crude to trade between $70 and $100 a barrel in the second half of 2026. The bank said prices could fall toward the bottom of that range if oil flows through the Strait of Hormuz recover even modestly, estimating that just 50% to 60% of pre-war quantities would be enough to revive expectations of an oversupplied global market.