By COMFORT OGBONNA
Oil prices recovered slightly on Tuesday after falling more than 2% in the previous session as investors weighed the impact of the latest U.S. sanctions against Iran and assessed the potential risks to global crude supplies.
Brent crude futures rose 27 cents, or 0.3%, to $92.44 a barrel by 0330 GMT. U.S. West Texas Intermediate crude gained 37 cents, or 0.4%, to $85.38 a barrel.
The modest recovery followed a sharp decline on Monday, when both benchmarks settled lower. U.S. crude fell to a one-week low as investors took profits following a rally that had lifted oil prices over the previous two weeks.
The market response suggested that traders currently view the latest U.S. pressure on Iran as more likely to affect the country’s economy than immediately disrupt its oil exports.
Analysts said investors appeared relatively calm about Washington’s efforts to persuade countries to reduce their economic ties with Iran, viewing the measures as less likely to cause an immediate disruption to physical oil supplies.
U.S. Treasury Secretary Scott Bessent announced an expansion of sanctions aimed at putting additional pressure on Iran and restricting its access to the international financial system. Countries that continue doing business with Iran could face restrictions that would make it more difficult for them to access the U.S. dollar-based financial system.
However, Bessent did not identify which countries could face penalties or provide a specific timetable for enforcement. He said countries would be given time to comply with the new measures.
The approach has helped ease some fears that the confrontation could immediately spill over into a broader military conflict that threatens oil production or transportation across the Middle East.
U.S. officials have continued to leave open the possibility of military action against Iran, adding to the uncertainty surrounding the conflict. But the latest emphasis on economic pressure has led some investors to conclude that the immediate threat to physical oil supplies is lower than previously feared.
That distinction is important for oil markets because the region remains a critical source of global energy supplies.
Analysts said the market appeared to be treating economic sanctions as a lower-risk development for oil production and transportation than direct military action. That helped explain why crude prices initially fell rather than surge after the latest U.S. measures were announced.
However, the threat to shipping remains a major concern.
Iran retains the ability to disrupt maritime traffic in and around the Strait of Hormuz, one of the world’s most important energy corridors. Any prolonged disruption could significantly affect global oil supplies and send prices sharply higher.
The risks were underscored Tuesday when an oil tanker was struck by an unidentified projectile and disabled about 9 nautical miles, or 16.7 kilometers, northeast of Oman’s Ash Shishah, according to the United Kingdom Maritime Trade Operations.
The incident added another layer of uncertainty for shipping companies and energy traders already monitoring the security situation in the region.
Iran has continued to assert control over the Strait of Hormuz and has threatened action against vessels that it says violate its rules for crossing the strategic waterway.
Before the war began in February, cargoes equivalent to roughly one-fifth of global oil consumption typically passed through the strait, making the waterway crucial to the international energy market.
Iran said Monday that it had identified 45 tankers that it accused of violating its rules and threatened possible action against them, including the seizure of their cargoes.
Any sustained disruption to the strait could have consequences far beyond the Middle East by limiting the amount of crude reaching international markets and increasing competition among buyers for available supplies.
The conflict has already contributed to supply disruptions, forcing countries to draw down both commercial inventories and strategic reserves.
The United States has also been using its Strategic Petroleum Reserve to help manage the effects of the disruption. Government data showed that U.S. strategic crude inventories fell by about 3.7 million barrels during the latest week to approximately 289.7 million barrels.
That brought the reserve to its lowest level since November 1982, highlighting the pressure that prolonged supply disruptions can place on emergency energy stocks.
For now, however, oil markets appear to be balancing two competing forces. On one side is the possibility that sanctions and economic pressure could weaken Iran’s ability to export oil. On the other is the risk that the conflict could escalate and disrupt production or shipping, creating a much larger supply shock.
The recent decline in crude prices suggests traders are currently assigning greater weight to the first scenario.
Still, the situation remains highly fluid. Any attack on energy infrastructure, disruption of tanker traffic or escalation involving the Strait of Hormuz could quickly change market expectations and push oil prices higher.
Investors will therefore continue watching developments involving Iran, international shipping and U.S. sanctions closely as they assess whether the latest measures will remain primarily an economic pressure campaign or develop into a larger threat to global energy supplies.
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