Oil Prices Decline Below $90 Amidst ‘Operation Economic Outcast’
Oil prices fell Tuesday as escalating economic tensions between the US and Iran and a renewed trade row between the US and Canada fueled uncertainty over global oil demand.
International benchmark Brent crude futures for November delivery traded at $89.66 per barrel, down 0.97% from the previous close of $90.54.
US benchmark West Texas Intermediate (WTI) crude futures for October delivery traded at $84.20 per barrel, down 0.95% from $85.01.
The US launched Operation Economic Outcast on Monday, a campaign aimed at further isolating Iran from the global financial system.
“Our objective is to sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone,” Treasury Secretary Scott Bessent told reporters.
The US is “no longer managing the Iranian threat” but rather “ending it,” Bessent said, adding that the “strength of America’s economy” enabled Washington to conduct such a financial offensive alongside military operations.
Directed by US President Donald Trump, the “unprecedented” sanctions target Iran’s “most vital lifelines,” including aviation, shipping, gold, technology, and digital assets, he said.
Bessent also noted that the Treasury was blacklisting more than 60 entities, individuals, and vessels worldwide, significantly broadening secondary sanctions risks for any international party continuing to conduct business with Tehran.
The market response remained muted, however, as investors assessed how effectively the measures would be enforced, particularly against countries that continue to buy Iranian oil.
Prices also came under pressure as Washington appeared to prioritize economic measures over additional military action, easing concerns about an immediate disruption to Middle Eastern oil supplies.
Still, US Defense Secretary Pete Hegseth said Monday that Washington is not ruling out further military strikes on Iran, even as the Trump administration intensifies economic pressure on Tehran.
Asked whether kinetic strikes were currently on pause, Hegseth said: “No. If we need to use kinetic strikes, we’ll use them.”
“If Iran is foolish enough to overplay their hand or mess with the American military, we’ll do what we need to do,” he told reporters after a speech to defense industrial workers in Oshkosh, Wisconsin.
Hegseth said economic pressure was currently hurting Iran the most but added that the US was “by no means” ruling out strikes “anywhere in the Strait of Hormuz or around Iran.”
He also claimed the US maintains control of the Strait of Hormuz, saying Washington’s blockade was “ironclad” and that Iran was unable to move oil through the waterway, while the US could protect shipping.
Renewed trade tensions between the US and Canada also added to concerns about the global economic outlook and energy demand.
Trump said Monday on his Truth Social platform that Canada is “among the worst Nations in the World to deal with. They feel entitled yet WE DON’T NEED CANADA, THEY NEED US.”
About 70% of Canadian exports go to the US.
Following the breakdown in negotiations, a threatened 50% US tariff on CAN$28 billion (US$20.21 billion) worth of Canadian goods took effect Saturday.
Trump also announced that an additional 50% tariff on Canadian cars, trucks and auto parts would take effect Jan. 1 after the talks failed to produce an agreement.
Carney, however, said Canada was reducing its reliance on the US market by expanding trade relationships with other countries.
Ontario Premier Doug Ford and US President Donald Trump traded insults on Monday following the breakdown of trade talks between Canada and the US.
Ford called Trump a “dictator” and the “king of bankruptcies” after the president criticized him on his propriety social media platform Truth Social.
Trump also repeated his claim that Canada “couldn’t survive” without the US and again referred to Prime Minister Mark Carney as “Governor Carney,” a reference to his calls for Canada to become the 51st US state.
Ford responded minutes later. “I am not going to take any advice off a guy that is the king of bankruptcies and he is actually tariffing his own people, taxing his own people,” Ford said. “I don’t respond to a dictator like President Trump.”
Ford also threatened to impose an export tariff on electricity supplied by Ontario to about 1.5 million homes and businesses in Michigan, New York and Minnesota.
He noted that Alberta supplies the US with about 4.1 million barrels of oil per day. Oil Jumps, Brent Tops $91 as US Rules Out Iran Truce Extension
