Oil markets face a volatile reopening after Washington promised its toughest sanctions yet on Iran and countries that continue trading with Tehran. Brent crude ended Friday at $94.39 a barrel after six consecutive gains, while traffic through the Strait of Hormuz remained near a standstill ahead of Monday’s sanctions announcement.
U.S. Prepares New Economic Pressure on Iran
The United States and Iran exchanged fresh threats Saturday as Treasury Secretary Scott Bessent prepared to disclose a new sanctions package Monday.
President Donald Trump has warned of economic consequences for countries that provide financial or commercial support to Iran. The measures could target Iranian oil sales, shipping networks, financial institutions and foreign companies that help Tehran generate revenue.
Iranian officials have rejected the planned restrictions and warned that the country would respond to additional U.S. pressure. Although direct fighting has paused, Iran retains the ability to disrupt commercial shipping and energy infrastructure across the region.
The sanctions announcement will determine whether Washington targets only Iranian entities or also imposes secondary penalties on companies, banks and governments that continue doing business with Tehran. Broad secondary sanctions would pose the greater risk to oil supplies because they could force buyers, insurers and shipping companies to withdraw from Iranian trade.
Why Are Oil Prices Rising?
Brent crude settled at $94.39 a barrel Friday, gaining 6.4% during the week. West Texas Intermediate closed at $87.06, recording a weekly increase of 5.7%, according to Reuters.
The advance reflected concerns that the new sanctions could remove additional Iranian barrels from the market or trigger retaliation against regional energy shipments.
Brent has recovered sharply from below $80 in early August. The one-month chart shows the price approaching $95 after climbing steadily during the second half of the month.
A move above $95 would bring the July area above $100 back into focus. However, oil could retreat if Monday’s measures prove narrower than expected or if Washington and Tehran avoid further escalation.
Brent Crude Oil One-Month Price Chart: Source: Trading Economics
Why Does the Strait of Hormuz Matter?
The Strait of Hormuz provides the only maritime route from the Persian Gulf to the open ocean. Before the conflict, it handled about one-fifth of global oil and liquefied natural gas shipments.
Shipping activity has since collapsed. Only five commodity vessels crossed the strait on Aug. 15, while no tracked commodity vessels completed the passage the following day, according to shipping data reported by Reuters. More than 130 vessels crossed the waterway each day before the conflict began.
The U.S. Energy Information Administration estimated that crude oil and petroleum liquids moving through Hormuz averaged 4.9 million barrels per day during the second quarter. That was down from 21.6 million barrels per day in the fourth quarter of 2025.
The MacroMicro chart, using IMF PortWatch data, shows the same structural break. Daily transit calls and trade volume fell from their historical ranges to exceptionally low levels in 2026.
The decline means the oil market has less protection against another disruption. Even without renewed military strikes, threats against vessels can increase freight rates, insurance costs and delivery delays.
Strait of Hormuz Daily Transit Calls and Trade Volume. Source: IMF PortWatch Data via MacroMicro
China Faces the Greatest Exposure
China buys more than 80% of Iran’s shipped oil, placing Chinese refiners and trading companies at the center of the sanctions risk.
Iranian crude offers for September and October have already fallen as the U.S. blockade restricts exports. Iran’s shipments dropped to about 534,000 barrels per day in August, compared with an average of 1.4 million barrels per day in 2025, according to Reuters.
The remaining supply has become more expensive. Iranian crude, which traditionally trades at a discount, has reportedly moved toward premiums as buyers compete for limited cargoes. Some independent Chinese refiners have started seeking alternatives from Iraq and Brazil.
Monday’s announcement could increase that pressure. Sanctions against Chinese banks, ports, refiners or shipping companies would make Iranian purchases more difficult, even for firms willing to accept the political risk.
However, China has consistently opposed unilateral U.S. sanctions. That raises questions about enforcement and whether targeted companies will retain access to the American financial system.
What Could Move Oil When Trading Resumes?
The scope of the sanctions will provide the first market signal. Measures covering foreign buyers, banks, tankers and insurers would create a stronger supply risk than restrictions limited to Iranian officials or domestic institutions.
Iran’s response will carry equal importance. Any threat against tankers, Gulf energy facilities or alternative export routes could push Brent toward the $100 area. A limited response could prevent the risk premium from expanding further.
Additional production from the United States, the United Arab Emirates and Venezuela could offset part of the disruption. Those supplies, however, cannot immediately replace all the crude previously transported through Hormuz.
Oil traders will therefore enter the new week balancing two outcomes: tighter enforcement that removes more Iranian supply, or a narrower sanctions package that allows the recent rally to cool.
For now, Brent’s climb toward $95 and the collapse in Hormuz traffic show that the market remains exposed to any escalation between Washington and Tehran.
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