Oil Prices Drop 4% as Traders Dismiss US Sanctions

Oil prices fell about 4% to a one-week low on Tuesday as traders shrugged off the latest U.S. sanctions campaign against Iran, viewing economic pressure as posing less risk to oil supplies than a military escalation.

Brent crude futures were down $3.83, or 4.2%, to $88.34 a barrel by 11:44 a.m. EDT, while U.S. West Texas Intermediate crude futures fell $3.34, or 3.9%, to $81.67.

Both benchmarks hit their lowest levels since August 17.

The shift from military conflict to economic pressure in the U.S.-Israeli war with Iran has reduced some of the oil market's anxiety, said Saxo Bank head of commodity strategy Ole Hansen, adding the U.S. sanctions announcement was not as forceful as some traders had expected.

Treasury Secretary Scott Bessent unveiled the measures on Monday, almost six months into a conflict the U.S. has struggled to resolve. But he declined to identify the countries that would be targeted or say when penalties would take effect, adding he would give them time to comply with the new directives.

The economic pressure campaign has revived expectations of talks between the U.S. and Iran to resolve their conflict, which began when the United States and Israel launched military strikes on