Oil prices moved lower on Monday after signs of improving shipping activity through the Strait of Hormuz eased some concerns about severe supply disruptions in the Middle East.
Iran reportedly allowed several Iraqi oil tankers to pass through the strategically important waterway, offering a limited sign that commercial traffic may be starting to recover.
Shipping Activity Through Hormuz Improves
The New York Post also reported that shipping traffic through the Strait of Hormuz has increased significantly over the past two weeks.
However, activity remains well below levels seen before the conflict escalated.
The improvement helped reduce some immediate fears of a prolonged shutdown, although traders remain cautious because the region continues to face significant geopolitical risks.
Brent and WTI Pull Back After Strong Gains
At 07:41 ET, Brent crude futures fell around 1.2% to $93.25 per barrel, while WTI crude dropped 2.2% to $85.18 per barrel.
Despite Monday’s decline, both benchmarks remain more than 5% higher over the past two weeks.
Oil prices had been supported by expectations that tighter U.S. sanctions on Iran could further disrupt Middle Eastern energy supplies.
U.S. Prepares Tougher Iran Sanctions
The United States is expected to unveil its most aggressive package of economic sanctions against Iran on Monday.
Treasury Secretary Scott Bessent described the upcoming measures as an “economic D-Day” for Tehran in an opinion piece published by the Financial Times.
The announcement follows warnings from several U.S. officials, including President Donald Trump, that Washington is prepared to intensify economic pressure on Iran.
Bessent is expected to provide further details during a press conference later on Monday.
Iran Warns of Further Oil Supply Disruptions
Iranian officials have responded with fresh warnings over energy shipments through the Persian Gulf.
Mohsen Rezaee, Secretary of Iran’s National Security Council, warned that oil exports through the Strait of Hormuz and elsewhere in the Persian Gulf could be halted if the economic confrontation with the United States continues.
Iranian officials have also cautioned neighboring Gulf states against cooperating with Washington.
These warnings continue to keep oil traders focused on the possibility of renewed supply disruptions.
Iran Allows Iraqi Tankers to Pass
Iranian media reported over the weekend that Tehran had approved passage for some Iraqi oil tankers following repeated requests from Baghdad.
The exact number of vessels and the volume of oil involved remain unclear.
Still, the development suggests that some commercial shipping is again moving through the Strait of Hormuz after traffic had been severely restricted.
The waterway had been largely blocked following the escalation of hostilities between the United States and Iran earlier this year.
Strait of Hormuz Remains Critical for Global Oil Supply
Commercial shipping through Hormuz slowed dramatically last week as tensions between Washington and Tehran showed few signs of easing.
The Strait of Hormuz remains one of the world’s most important energy routes.
Before the current conflict, roughly 20% of global oil supplies moved through the waterway, making any disruption highly significant for international energy markets.
Investors have therefore continued to price in the risk of further supply shocks, especially after U.S. officials suggested that tensions with Iran could persist.
Red Sea Tensions Add Another Risk for Oil Markets
Concerns are also spreading beyond the Persian Gulf.
Yemen’s Iran-backed Houthi movement has announced a naval blockade targeting Saudi Arabia, raising fears that the conflict could create additional disruptions in the Red Sea.
Any escalation across multiple shipping routes could once again tighten global oil supplies and push crude prices higher.
For now, the partial return of Iraqi tanker traffic through Hormuz has provided some relief. However, with new U.S. sanctions approaching and tensions across the region still elevated, oil prices are likely to remain sensitive to developments involving Iran, the Strait of Hormuz and the wider Middle East.
