U.S. Sanctions on Iran Push Oil Prices Lower

U.S. sanctions on Iran and diplomatic moves drive fluctuations in Brent and WTI crude prices.

On Friday, oil prices fell as the U.S. announced new sanctions against Iran. President Donald Trump suggested he would take two weeks to decide U.S. involvement in the conflict between Israel and Iran, and a day after his announcement, a diplomatic move took place that fueled expectations of a negotiated agreement.

The price of Brent crude futures dropped by $1.84, or 2.33%, settling at $77.01 per barrel. Thursday's trade for the July contract of U.S. West Texas Intermediate (WTI) oil did not settle because of a U.S. holiday. It was set to expire on Friday, and its price dropped by 21 cents, or 0.28%, to $74.93 per barrel. Meanwhile, the final agreed-upon price for the more actively traded August oil contract was $73.84 per barrel at the end of trading that day. U.S. front-month crude futures jumped 2.7% during the week, while Brent crude oil prices rose 3.6%. According to a notice on the U.S. Treasury Department’s website, the Trump administration issued new sanctions, including sanctions against two organizations based in Hong Kong, as well as additional sanctions related to counterterrorism activities. The Treasury's Office of Foreign Assets Control reports that three vessels, five individuals, and more than 20 entities are targeted by the sanctions.

John Kilduff, a partner at Again Capital in New York, stated that the fact that these actions are happening shows that there is a hope to solve things without fighting. Oil prices increased by nearly 3% on Thursday after Israel bombed Iranian nuclear sites. Iran, OPEC's third-largest oil producer, responded by firing drones and missiles toward Israel.