WASHINGTON (dpa-AFX) - Partially offsetting the gains from the six previous sessions, crude oil prices have slumped on Monday as the U.S. unleashes a massive economic offensive against Iran to compel the nation to strike a deal with the U.S. In addition, investors resorted to booking profits from last week's gains.
WTI Crude Oil for October month delivery was last seen trading down by $2.13 (or 2.45%) at $84.93 per barrel.
The Middle East crisis which started after the breakout of war in late February between the U.S. and Iran continues without easing.
The Memorandum of Understanding signed between both the nations on June 17 ended abruptly and mediation by Pakistan in coordination with the allies of the U.S. in the gulf to bring the nations to the negotiating table failed to yield any breakthrough.
Iran consulted Oman over joint management of the Strait of Hormuz without involving the U.S.
On Thursday, Trump messaged through Truth Social that Iran failed to utilize the chances given to strike a deal and announced plans to impose a crushing economic blockade on a scale never seen before.
Trump warned that any nation that attempts to offer a lifeline to Iran would face similar actions.
Dismissing Trump's threats as a mere diversionary tactic employed to shift global attention from the debt crisis ($40 trillion) the U.S. is facing, Iran warned that any nation supporting the U.S. measures would be considered an ally of Iran's enemy.
Throughout last week, the U.S.-Iran standoff supported crude oil prices on the upside and oil prices traded high for six consecutive sessions. Today, investors opted to book profits from the gains spanning more than 6%.
On Sunday, in an Op-Ed for the Financial Times, U.S. Treasury Secretary Scott Bessent claimed that the U.S.-Israel war with Iran is entering its endgame and threatened Iran with the single greatest financial offensive ever.
Anticipating a large-scale supply disruption for crude oil and energy in the near-term, investors held back from big moves.
Today, Bessent unveiled the sanctions plan, dubbed 'Operation Economic Outcast' aimed to cut off the financial channels supporting Iran's government.
According to the plan, the Office of Foreign Assets Control sanctioned nearly 60 entities, individuals, and vessels that aid Iranian operations and suspended several licenses that authorized remittance payments to Iran.
The OFAC also warned of sanctions against vessels bowing to Iranian demands connected to the Strait of Hormuz transit.
The OFAC sanctions targeted any person that operates in the Iranian economy in sectors including digital assets, technology, gold, aviation, and shipping.
With plans to impose secondary sanctions on Iran's 'enablers,' Bessent called for world leaders to choose either the U.S. or Iran.
With the economy already under severe pressure, Iranian Rial trades close to nearly 2.02 million to one U.S. dollar.
As the U.S.-Iran standoff continues, the diminishment in shipping traffic across the Strait of Hormuz continued.
Reuters reported (citing Kpler's data) that around 13 tankers passed through the strait on Saturday with only four making the journey on Sunday.
Prior to that, on Friday, 16 vessels passed through the narrow seaway while one Very Large Crude Carrier exited the channel on Thursday.
Data from the U.K. Maritime Trade Operations center revealed that over the week to August 21, nearly 103 vessels entered the strait, while 89 exited.
On Sunday, Iran's IRNA quoted Iran's Foreign Ministry Spokesperson Esmaeil Baghaei as stating that Pakistan's Army Chief Field Marshal Asim Munir is visiting Iran on Monday.
The news is read as another step in Pakistan's efforts for de-escalation of the Middle East tensions.
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