Before the US announces new sanctions on Iran, oil prices decline.

As investors cashed in on recent gains and awaited information about anticipated fresh U.S. sanctions on Iran, which might further hamper supplies from the Middle East, oil prices fell more than $1 per barrel on Monday. At 1316 GMT, U.S. West Texas Intermediate crude was down $1.42, or 1.6%, to $85.64 a barrel, while Brent crude futures were down $1.01, or 1.1%, to $93.38. As peace talks between the United States and Iran faltered, limiting oil exports via the Strait of Hormuz—a conduit that formerly carried a fifth of world supplies—both futures saw a second straight weekly rise last week, climbing more than 5%.

U.S. Treasury Secretary Scott Bessent has vowed to slap “the toughest sanctions in history” on Iran during a press conference scheduled for Monday at 1 p.m. EDT. Additionally, penalties against Iran’s trading partners have been threatened by President Donald Trump.Oil supplies from the region will decline if the planned embargo is implemented, according to PVM analyst Tamas Varga. The U.S. will probably increase its naval blockade on Iranian oil exports, and Iran might respond with more strikes against Middle Eastern oil installations.

Iran’s president, Masoud Pezeshkian, has urged for a diplomatic settlement and denounced the United States’ plans to unveil fresh penalties. On Monday, the head of Pakistan’s army went in Tehran for talks on mediation. According to shipping data released on Monday, less than 20 commodity ships crossed the Strait of Hormuz over the weekend due to U.S. and Iranian blockades that prevent energy exports from passing through the chokepoint.

However, after repeated requests from Baghdad, Iran has allowed several Iraqi oil tankers to cross the strait, according to a Saturday report from Iran’s official news agency IRNA.

According to Patrick Pouyanne, CEO of TotalEnergies the oil giant was shipping oil through the Strait of Hormuz profitably, with significant discounts from crude suppliers more than offsetting greater transportation costs.

Iraq’s SOMO and QatarEnergy both offered ⁠crude for loading inside the strait in tenders, traders said. “$93 per barrel Brent, rather than $120-150, is telling us that enough oil is flowing through the Strait of Hormuz and from the Persian Gulf in general,” SEB analyst Bjarne Schieldrop told Reuters, adding that a turning point could be if Iran ⁠decided to actually close Hormuz with rockets and drones.

According to a report from Morgan Stanley analysts, inventory withdrawals and a growing belief that disruptions in the Middle East may linger longer have caused Brent to rise back up to almost $92 per barrel, from as low as $71 in June. The bank raised its expectations for Brent, putting it at a peak of $100 in the fourth quarter. Fatih Birol, the head of the International Energy Agency, stated on Monday that the agency is not currently considering a second release of oil from strategic reserves.