Brent crude slipped to $89 a barrel on Tuesday as Pakistan's mediation efforts offset bullish momentum from new US sanctions on Iran. Tehran's crude exports have slumped this month, and tanker traffic through the Strait of Hormuz has thinned.
Pakistan mediation cools sanctions rally
The Trump administration ratcheted up pressure on Iran on Monday, but oil pulled back Tuesday as Pakistan's mediation efforts offset the bullish momentum built up after Treasury Secretary Scott Bessent's press conference. Traders are still hoping for a negotiated settlement, and that hope sent ICE Brent lower.
Bessent unveiled the Trump administration's long-mooted "economic D-Day" measures against Tehran, threatening Iran's main trading partners with exclusion from the dollar system. Iran, in turn, has threatened fines, detention and cargo confiscation against 45 tankers deemed non-compliant for dark transits through Hormuz.
Iran's oil trade runs on borrowed time
Iran's August crude oil exports have averaged only around 0.3 million barrels per day, far below the 2025 average of 1.7 million barrels per day, with only one confirmed loading at the country's largest terminal on Kharg Island. The US Navy's maritime blockade in the Gulf of Oman has choked off Tehran's exports even before the latest sanctions took effect.
China's imports of Iranian barrels are running around 800,000 barrels per day, slightly above Tehran's current loading pace thanks to volumes evacuated during a three-week window of free navigation in June and July. However, Chinese buyers are drawing down stocks and could run out of Iranian options by October if the blockade continues. Iranian floating storage outside the Gulf has shrunk to 24 million barrels, down 7 million barrels since the start of August, as Chinese buyers mop up the last remaining volumes.
Hormuz traffic grinds to a halt
Only two vessels crossed the Strait of Hormuz on Monday, compared with a previous ten-day average of 14, after Iran's threats against dark transits and non-compliant tankers. The squeeze is already showing up in pricing: Iran Light now trades at a $4 per barrel premium to ICE Brent.
Source: Oilprice.com
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