Oil Prices Recover After Being Battered
Oil prices stabilised in trading on Tuesday (25/8/2026) after plunging more than 2% in the previous session. Investors were assessing the impact of tighter United States secondary sanctions against Iran.
In trading on Tuesday (25/8/2026) at 09.12 Western Indonesia Time, Brent crude rose 0.58% to US$92.71 per barrel, while West Texas Intermediate (WTI) crude climbed 0.71% to US$85.61 per barrel.
The increase was welcome news after Brent crude fell 2.35% to US$92.17 per barrel and WTI plunged 2.4% to US$85.01 per barrel in trading on Monday (24/8/2026).
Monday’s decline ended a six-day rally.
Oil prices fell on Monday due to profit-taking after a rally over the previous two weeks.
US Treasury Secretary Scott Bessent on Monday announced expanded sanctions aimed at cutting off Iran’s economic resources and forcing an end to the war between the two countries.
Countries that still maintain business ties with Iran will be asked to sever those ties or face the risk of being excluded from the US dollar-based financial system.
However, Bessent did not specify which countries would be targeted or when the sanctions would take effect. He said the US government would give the relevant countries time to comply with the new policy.
Meanwhile, US Defence Secretary Pete Hegseth said Washington has not ruled out the possibility of using military force against Iran. However, the US is now leaning more towards economic pressure.
Analysts assessed that the change in approach eased concerns about oil supply disruptions from the Middle East due to the war.
“The market appears to be pricing in economic pressure as a lower-risk path for physical supply compared with military action. That is why the market’s initial reaction was for oil prices to fall, not spike,” said Tim Waterer, chief market analyst at KCM, to Reuters.
Nevertheless, he cautioned that Iran still has the ability to respond by disrupting shipping. That situation means a risk premium remains attached to oil prices.
The threat was visible again on Tuesday. An oil tanker was struck by an unidentified projectile and sustained damage about 9 nautical miles, or 16.7 kilometres, northeast of Ash Shishah, Oman, according to United Kingdom Maritime Trade Operations.
Iran also continues to maintain its claim of control over the Strait of Hormuz. Before the war began in February, the strategic waterway typically served as a route for cargo equivalent to about 20% of global oil consumption.
On Monday, Iran even named 45 tankers it considered to have violated rules while transiting the strait and threatened to take action, including seizing cargo.
Supply disruptions caused by the US-Israel war against Iran that began on 28 February have prompted a number of countries to draw down commercial and strategic oil reserves.
The US Department of Energy on Monday reported that crude oil stocks in the US Strategic Petroleum Reserve fell by about 3.7 million barrels to 289.7 million barrels last week. That level is the lowest since November 1982.