Global oil prices steadied on Tuesday as traders assessed the potential impact of the latest US sanctions targeting Iran and their possible effect on crude supplies.
Brent crude gained 27 cents, or 0.3%, to reach $92.44 per barrel, while US West Texas Intermediate (WTI) rose 37 cents, or 0.4%, to $85.38 per barrel. The modest recovery followed a decline of more than 2% in the previous session.
Markets See Sanctions As Limited Supply Risk
The latest US measures are aimed at increasing economic pressure on Iran and encouraging countries to reduce business ties with Tehran.
For now, traders appear to view the sanctions as less disruptive to physical oil supplies than direct military action. This has prevented a sharp surge in crude prices despite continuing geopolitical tensions.
However, Iran’s ability to disrupt shipping remains a concern for energy markets. The Strait of Hormuz, a critical global oil route, continues to carry a significant risk premium because of the possibility of further disruptions.
Shipping Risks Keep Oil Market On Edge
Concerns over maritime security resurfaced after an oil tanker was reportedly struck by an unidentified projectile near Oman and became disabled.
Iran has also warned vessels over its rules for crossing the Strait of Hormuz, adding another layer of uncertainty for international energy markets.
Meanwhile, US crude inventories are also being closely monitored. The Strategic Petroleum Reserve fell by around 3.7 million barrels to 289.7 million barrels, its lowest level since November 1982.
Oil Market Faces Continued Volatility
For now, investors appear more comfortable with economic pressure on Iran than a wider military escalation. However, any disruption to shipping or crude exports could quickly change market sentiment.
With geopolitical tensions still elevated and global oil inventories under pressure, crude prices are likely to remain sensitive to developments surrounding Iran, US sanctions and the Strait of Hormuz.