Oil prices fall more than 2% despite new Iran sanctions as traders take profits

Oil prices fell more than 2% on Monday (local time) despite US Treasury Secretary Scott Bessent's announcement of sweeping new sanctions against Iran, as market participants moved to take profits on recent gains.

Brent crude for October delivery settled at $92.17 a barrel on the London ICE Futures Exchange, down $2.22, or 2.35 percent, from the previous session. West Texas Intermediate crude for October delivery also closed down $2.05, or 2.35 percent, at $85.01 a barrel on the New York Mercantile Exchange.

The decline marked the first drop in seven trading sessions since Aug. 13. Both Brent and WTI had each risen more than 5 percent last week amid expectations of Iran sanctions and growing concerns over Middle East instability.

Bessent announced at a press conference Monday that the United States was launching "Operation Economic Outcast" to cut off every option available to the Iranian regime. The measures include secondary sanctions on third-country entities that conduct transactions with Iran involving digital assets, technology, gold, aviation and shipping. The Treasury also designated more than 60 organizations, individuals and vessels worldwide as new sanctions targets for helping the Iranian regime acquire nuclear and missile technology, conduct cyber operations and generate oil revenues.

Tighter sanctions on Iran typically push oil prices higher by raising concerns about reduced Iranian crude supply. On this occasion, however, market participants appeared to treat the announcement as a chance to cash in on recent gains.

"Very few market participants believe Bessent can deliver something that will 'bring down' the Iranian regime," said Arne Lohmann Rasmussen, chief analyst at Global Risk Management. Bessent did not specify a timeline for implementing the measures, and the White House did not disclose what additional steps it was planning.