Oil prices retreated on Monday after Treasury Secretary Scott Bessent unveiled a new sanctions push against Iran, dubbed "Operation Economic Outcast," while holding off on secondary sanctions. West Texas Intermediate and Brent crude both fell 2.6%, and Iran's Supreme National Security Council warned it could halt oil exports through the Strait of Hormuz if the pressure continues.
West Texas Intermediate crude for October delivery dropped 2.6% on Monday to trade at around $84.82 per barrel. October Brent crude, the global benchmark, slipped 2.6% to around $91.98 per barrel. Traders were assessing Bessent's pledge that the U.S. will crack down in new ways on countries that continue to do business with Iran.
Bessent unveils "Operation Economic Outcast"
Bessent announced the launch of "Operation Economic Outcast," which he also billed as an economic D-Day for Iran. The rollout featured new sanctions covering about 60 Iran-linked entities. Yet he defended the administration's decision not to impose new secondary sanctions yet, saying Washington is giving other countries a chance to cut ties with Tehran first.
New sectoral determinations issued Monday target five of Iran's most vital pipelines — digital assets, technology, gold, aviation and shipping. Bessent also said he expects a major financial institution to be sanctioned by the end of the week.
China's role looms over sanctions timing
Asked why Chinese banks are not yet targeted, Bessent said no country is above the reach of U.S. sanctions but that officials prefer quiet diplomacy while setting expectations with each country. China has for years been the biggest buyer of Iranian oil, making Beijing's response a key variable in how far the sanctions escalate. According to Gregory Brew, a senior analyst at Eurasia Group, the administration is trying to ratchet up pressure without triggering significant Iranian action or angering Iran's trading partners, most notably China.
Iran threatens to halt Hormuz exports
The standoff between Washington and Tehran is nearing its sixth month. On Sunday, Mohsen Rezaei, secretary of Iran's Supreme National Security Council, said Iran would halt all crude oil exports through the Strait of Hormuz and the Persian Gulf if the economic pressure continues. According to MarketWatch: "not a single drop of oil will be exported" if the standoff persists, Rezaei said, adding that any country joining U.S. sanctions would face treatment as an act of war against the Iranian people.
Source: MarketWatch
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