Oil prices experienced a notable decline on Monday, falling more than 2% for both Brent and WTI benchmarks, despite ongoing geopolitical tensions in the Middle East. The retreat came as resistance levels held firm, triggering an expected pullback in the market. Interestingly, China's crude futures segment showed unusual movement, with both high and low sulfur contracts hitting limit-up as near-month contracts approached their final trading day requiring position liquidation. The high-sulfur near-month contract surged nearly 1,000 yuan in just two trading sessions, serving as a stark reminder for investors to familiarize themselves with trading rules and strengthen risk awareness to avoid excessive exposure.
While geopolitical factors remained tense—with Houthi forces claiming attacks on Saudi military targets and oil tankers while warning of further escalation, and Iran blacklisting 45 tankers violating Hormuz passage rules—these developments failed to prevent the price correction. The market's focus has shifted to the actual effectiveness of unprecedented US economic sanctions against Iran and the real export volumes from the Gulf region amid the blockade, questions that will require time to answer.
US Treasury Secretary Scott Bessent announced on Monday an "unprecedented" economic campaign against Iran, targeting the complete severance of Tehran's connections to the global economy. Bessent warned that any nation continuing to do business with Iran could face American sanctions, and any entity laundering money for Iran would be removed from the dollar system. Iran publicly downplayed the potential impact, with its foreign ministry spokesman arguing the measures violate international law and noting that previous rounds of US pressure have failed to achieve their intended objectives. Tehran emphasized it would deploy all bilateral capabilities to counter the economic sanctions while maintaining a firm stance on defending its core national interests.
The true flow through the Strait of Hormuz has become a hot topic of market discussion. Shipping tracker Kpler reports that approximately 80% of vessels transiting the strait over the past two weeks have employed stealth navigation methods—shutting off Automatic Identification System (AIS) transponders and staying as far from the Iranian side as possible, hugging the Omani coastline instead. This invisible shipping operation has made actual Gulf export volumes a mystery. US Energy Secretary Chris Wright claims seven-day average crude flows through the strait reached 8 million barrels per day, with total regional energy outflows approaching the pre-conflict level of 20 million barrels daily when including pipeline exports—a figure widely viewed as inflated. Iran's foreign ministry spokesman dismissed reports of millions of barrels flowing daily through Hormuz as "psychological warfare by the enemy," insisting such claims are not factual. Third-party monitoring data varies dramatically, with daily outflow estimates for the past month ranging between 2 million and 6 million barrels, significantly lower than US figures.
The pullback after oil prices rebounded into key resistance zones reflects capital entering a wait-and-see phase, with traders showing caution about chasing further gains. The new round of US-Iran economic confrontation and the true flow dynamics at Hormuz have become the market's central focus. Prices are expected to remain in a relatively strong range-bound pattern until the situation clarifies, with risk management remaining essential for participants.
Daily Market Data
WTI crude futures fell $2.05, or 2.35%, to settle at $85.01 per barrel, while Brent crude futures dropped $2.22, or 2.35%, to $92.17 per barrel. INE crude futures declined 0.98% to 587.8 yuan. The US dollar index gained 0.15% to 98.99, while the US 10-year Treasury rose 0.19% to 108.48. The Dow Jones Industrial Average advanced 0.26% to 53,417.16, and the Hong Kong Stock Exchange USD/CNY rate climbed 0.09% to 6.7153.
Key Developments
Iran Downplays US Sanctions Impact, Adding Uncertainty to Middle East Supply Outlook
Iran has publicly minimized the potential impact of new US economic sanctions expected to be announced, emphasizing that past pressure campaigns have proven ineffective. Foreign ministry spokesman Esmaeil Baghaei stated that previous US pressure offensives failed to achieve their intended goals and insisted Iran maintains a firm stance on defending its core interests. The spokesman also accused the Trump administration of miscalculating its pressure strategy, suggesting Washington mistakenly believes the combination of military deterrence and economic sanctions could force Tehran to concede.
Morgan Stanley has significantly pushed back its timeline for Middle East supply recovery to 2027, and Iran's tough rhetoric means geopolitical supply risks are unlikely to fade in the near term, providing additional support for oil prices. The market is currently awaiting Washington's formal sanctions announcement, and if measures exceed expectations, they could further tighten an already deficit-bound supply-demand balance. The risk of Brent touching $100 per barrel in the fourth quarter is steadily accumulating.
Kpler Data: ~80% of Hormuz Transits Running Dark, Stealth Navigation Sustains Gulf Oil Exports
Shipping tracker Kpler reports that approximately 80% of vessels transiting the Strait of Hormuz over the past two weeks have adopted stealth navigation: disabling AIS transponders and staying as far from the Iranian coastline as possible while following the Omani side. This invisible shipping operation is helping sustain Gulf oil supplies and preventing international crude prices from surging further due to supply shortages.
The current shipping pattern reflects the market's non-public approach to managing geopolitical risk at Hormuz while maintaining basic stability in global energy flows. US Energy Secretary Chris Wright disclosed on social media that seven-day average daily volumes reached 8 million barrels, with total regional energy outflows approaching the pre-conflict level of 20 million barrels per day when including pipeline exports. Iran's foreign ministry spokesman dismissed reports of millions of barrels daily through Hormuz as "psychological warfare by the enemy," insisting such claims are not factual.
David Wech, chief economist at energy intelligence firm Vortexa, noted that last month's devastating US strikes on Iranian radar and maritime surveillance systems have loosened the "blockade line" at the strait. Many tankers are now conducting "shuttle-style" transport during nighttime hours, exploiting monitoring blind spots before completing transshipment in open waters. According to monitoring, daily outflows through the strait have remained between 6 million and 7 million barrels over the past month, though seven-day average volumes spiked to 10 million barrels during peak periods.
Iran's Persian Gulf Strait Authority Announcement
Iran's "Persian Gulf Strait Authority" has declared that vessels violating regulations for passage through the Strait of Hormuz will face restrictions including fines, detention, or confiscation on subsequent transits. The authority requires cargo owners with destinations or origins in the Persian Gulf to check the latest list of violating vessels on its official website before chartering. Additionally, vessels cooperating with listed violators through ship-to-ship transfers, transshipment operations, or other means will also be added to the violators list.
Iranian officials have issued stark warnings: if economic war continues, not a single drop of oil will be exported from the Strait of Hormuz or anywhere in the Persian Gulf. Iran's Supreme National Security Council Secretary Rezaei stated that Iran will view any nation participating in or supporting America's economic war against the Iranian people as an act of warfare. According to Iran's Mehr News Agency, the parliament's National Security and Foreign Policy Committee spokesman Hassan Kashkavi announced Sunday that the committee approved Article 3 of the "Strategic Action Plan for Ensuring Hormuz Strait Security and Development." Under this provision, fees will be charged for maritime services, environmental services, exceptional fuel supply, insurance, security, and other services provided to vessels authorized to transit the strait. These fees will be collected from vessels of relevant countries permitted through the strait, payable in rials or other currencies designated by the Islamic Republic. Kashkavi emphasized the importance of respecting the rights of coastal states along the strait, noting that international laws and regulations recognize not only freedom of navigation but also respect for coastal states' security and sovereignty while preventing infringement of those rights.