Crude price forecast: Oil falls, but Iran tensions keep $100 target alive

Oil prices fell on Monday as investors took profits after two strong weeks, but the retreat did little to remove the supply premium created by the US-Iran standoff and severely restricted shipping through the Strait of Hormuz.

Brent crude futures dropped about 1.3% to $93.16 a barrel in Asian trading, while WTI fell 1.6% to $85.70.

Both benchmarks had gained more than 5% last week, with Brent settling Friday at $94.39 and WTI at $87.06.

Traders are now waiting for Washington to unveil a tougher sanctions package against Iran and its trading partners later on Monday.

Profit-taking masks a still-tight market

The Monday decline looks more like position adjustment than a reversal in the oil story.

Prices had risen for two consecutive weeks as hopes for a US-Iran settlement faded and Middle East supply flows remained constrained.

Commerzbank Research analyst Barbara Lambrecht, in comments published by The Wall Street Journal, said the expected US measures are likely to focus on countries still buying Iranian crude, with China a central target.

That raises the risk that sanctions could squeeze the remaining outlets for Iranian barrels.

Iranian crude offers to Chinese refiners have already fallen sharply.

Shipments were running at about 534,000 barrels a day in August, compared with an average of 1.4 million barrels a day in 2025, while some cargoes that previously traded at discounts are now being offered at premiums.

Hormuz remains the bigger risk than sanctions

The more immediate problem is physical shipping. Kpler data showed only four commodity vessels crossed the Strait of Hormuz on Sunday and 13 on Saturday.

UK maritime authorities estimate AIS-detected traffic is about 90% below pre-conflict levels.

That matters because Hormuz handled close to a fifth of global oil flows before the conflict.

Iran has also warned that further US economic pressure could trigger an attempt to halt oil exports across the Persian Gulf, raising the risk beyond Iranian supply alone.

ING strategists Ewa Manthey and Warren Patterson said in an ING Think commodities note last week that Brent remained supported by the lack of progress between Washington and Tehran and persistent security problems around the strait.

The EIA has already lifted its 2026 Brent forecast to $87 a barrel, citing prolonged Hormuz constraints.

It estimates crude and petroleum-liquid flows through the strait averaged just 4.9 million barrels a day in the second quarter, down from 21.6 million in late 2025.

Refined fuels keep the market tighter than crude suggests

The pressure is increasingly visible in fuel markets as well.

Asian imports of light and middle distillates have fallen roughly 21% from pre-conflict averages, while Singapore gasoil margins have surged as diesel and jet-fuel availability tightens.

That helps explain why Brent remains above $90 even as traders periodically take profits.

Crude can be rerouted, inventories can be drawn and alternative suppliers can fill part of the gap, but refinery disruptions and shortages of the right crude grades are harder to solve quickly.

For now, the balance remains uncomfortable. Monday’s pullback shows traders are reluctant to chase prices ahead of the sanctions announcement.

But with Hormuz traffic still depressed and Iranian exports already shrinking, the broader oil market remains vulnerable to another supply-driven move higher.