Oil prices fell more than 2% on Aug. 24 after the Trump administration unveiled a new sanctions campaign against Iran, with traders viewing the measures as less immediately disruptive to Iranian crude exports than previously feared.

Following the announcement, West Texas Intermediate (WTI) crude fell about 2.5% to $84.9/bbl, while Brent crude declined 2.5% to $92/bbl. The pullback followed a strong rally last week, when both benchmarks rose more than 5% for a second consecutive week amid stalled US-Iran negotiations and heightened concerns over disruptions to traffic through the Strait of Hormuz.

US Treasury Secretary Scott Bessent announced the sanctions, known as "Operation Economic Outcast," at a Treasury Department press conference. The US Treasury Department has expanded its sanctions authority, allowing it to impose sanctions on anyone, regardless of location, that conducts business in five sectors of the Iranian economy (digital assets, technology, gold, aviation, and shipping).

The Office of Foreign Assets Control (OFAC) has specifically designated nearly 60 entities, individuals, and vessels involved in illicit procurement of nuclear and missile technology, cyber operations, and oil smuggling.

The Treasury has also suspended several previously issued licenses allowing specific payments to Iran. Among the oil-related sanctions targets, the Treasury named a network of brokers, companies, and shadow fleets operating in the UAE, Hong Kong, China, Singapore, Switzerland, and Europe, responsible for transporting Iranian crude oil and channeling revenue to the Quds Force of the Iranian Islamic Revolutionary Guard Corps.

The administration also has broadened the scope for secondary sanctions against parties that continue specified dealings with Iran. However, Washington has not immediately imposed broad secondary sanctions on Iran's trading partners. Instead, the administration is giving countries and companies timelines to end identified activities. The approach helped ease concerns of an immediate loss of Iranian crude from the global market.

China remains a key uncertainty for the oil market. China has historically been Iran's largest crude customer, accounting for a substantial majority of Iranian oil exports. Bessent has warned that no country is exempt from potential US sanctions, but the administration has so far avoided announcing specific punitive measures against Beijing. Trump is scheduled to host Chinese President Xi Jinping for a state visit on Sep. 24.

 “The real question now is how aggressively Washington is prepared to enforce secondary sanctions against Iran’s ​remaining trading partners. Unless China materially reduces purchases further, the additional impact on ​Iranian oil revenues could be relatively limited," said Jorge Leon, head of geopolitical analysis at Rystad Energy.

Oil-market concerns remain focused on the Strait of Hormuz. Fewer than 20 commodity vessels crossed the waterway over the weekend, according to shipping data. Iran has also threatened to retaliate against countries that cooperate with the US sanctions campaign, raising the possibility that the measures could ultimately have a larger impact on oil supplies if Tehran responds by further restricting shipping through Hormuz.