DTN Oil Update
Oil Extends Decline as New US Sanctions Spare Oil Supply
VIENNA (DTN) -- Oil prices softened Tuesday morning, extending Monday's decline, which came on the back of weaker-than-expected new U.S. sanctions on Iran which were deemed unlikely to negatively impact oil supply.
By 08:25 a.m. EDT, ICE Brent for October delivery was down $2.62 to trade near $89.55 barrel (bbl), and NYMEX WTI for October delivery fell $2.52 to $82.49 bbl.
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Downstream, NYMEX RBOB for September delivery slipped $0.0166 to $3.2542 gallon. ULSD futures bucked the trend, with the front-month contract inching up by $0.0117 to $4.2794 gallon.
The U.S. Dollar Index steadied, up 0.016 points to 98.945 against a basket of foreign currencies.
U.S. officials last week threatened Iran's trading partners with economic isolation, stoking concerns over Iranian oil exports. Monday's announcement, however, omitted any concrete steps regarding so-called secondary sanctions, and was much more limited in depth and scope than market participants had anticipated in the lead-up to the announcement of what Treasury Secretary Scott Bessent had called an "economic D-day."
The strategic pivot from a military pressure campaign to an economic one also chipped away at the geopolitical risk premium, as did expectations of a restrained Iranian response to the new sanctions. The U.S., however, did not rule out the return of strikes on Iran; and Tehran, who on Monday vowed retaliation, continued to launch attacks on oil tankers in the Strait of Hormuz.
How much crude oil is currently flowing through the chokepoint, meanwhile, remained unclear. Daily crossings of commercial ships trackable via AIS remained in the low single digits, and ship tracking companies estimated that total flows, including dark voyages and shuttling operations, amounted to some 5 million barrels per day (bpd). U.S. Energy Secretary Chris Wright, in contrast, claimed that 9 million bpd of crude oil left the Persian Gulf on average last week. Customs data from the main importers of Middle Eastern crude, mostly in Asia, will eventually allow the market to quantify actual flows, albeit with considerable delay.
In the U.S., the six-month long oil supply disruption left its mark on road fuel inventories. Last week, the Energy Information Administration (EIA) reported that nationwide gasoline and diesel stocks were trailing year-ago levels by 6.3% and 10.3%, respectively. Vast crude oil releases from emergency stockpiles, meanwhile, and a less skewed global supply-demand balance feathered the drop in commercial crude oil inventories, which remained some 1.9% higher than in the corresponding reporting week in 2025. Inventory estimates for the week ended Aug. 21 by the American Petroleum Institute are scheduled for release later Tuesday, followed by EIA data on Wednesday.