What matters more for oil prices is how hard U.S. sanctions hit China, Iran's biggest oil buyer, and whether Beijing pushes back

Global oil prices were pulling back on Monday but still holding above the $90-a-barrel mark as traders awaited details about new U.S. sanctions on Iran, with Treasury Secretary Scott Bessent due to speak about the issue at a news conference at 1 p.m. Eastern time.

The most-active West Texas Intermediate crude (CL00) (CLV26) contract for October delivery was down 2.3% on Monday to trade at around $85.07 per barrel, while October Brent crude (BRN00) (BRNV26) , the global benchmark, slipped nearly 2% to around $90.45 per barrel.

As the conflict between the U.S. and Iran nears the six-month mark, Bessent said in an op-ed in the Financial Times that "an economic D-Day is coming for Iran." He blasted "Iran's enablers" that "purchase and transport its petroleum," saying these nations "now exceed the limits of America's tolerance."

Mohsen Rezaei, secretary of Iran's Supreme National Security Council, on Sunday said that the country would halt all oil exports through the Strait of Hormuz and the Persian Gulf if U.S. economic pressure continues.

"If the economic war continues, not a single drop of oil will be exported, neither through the Strait of Hormuz nor from anywhere in the Persian Gulf," Rezaei said in a post on X.

He added that any participation in U.S. sanctions against Tehran will be treated as "an act of war" against the Iranian people.

Despite rising tensions between the U.S. and Iran, oil prices remained lower on Monday, suggesting that slowing global demand growth is still outweighing geopolitical risk in the energy market, said David Morrison, senior market analyst at Trade Nation.

"But so are strategic reserves, which have been drawn on heavily to help offset the sharp drop in tankers transiting the Strait of Hormuz," he added.

Also at stake for oil prices is how much the U.S. sanctions could affect China, and whether Beijing pushes back. China has for years been the biggest buyer of Iranian oil, putting its purchases in the spotlight as the U.S. threatens heavy economic sanctions on Tehran. A sharp decrease in China's oil imports has been pivotal to keeping oil prices lower since the start of the war in Iran.

"If Washington goes after Chinese refiners or financial institutions with credible secondary sanctions, this stops being a narrow Iran operation and begins looking like another front in the U.S.-China economic war," said Stephen Innes, managing partner at SPI Asset Management. "Beijing would then have to decide whether to swallow the pressure or fire something back across the bow."

He added: "The first market reaction would probably be straightforward. A sanctions package with genuine teeth should lift crude oil and give the dollar DXY an initial geopolitical bid. But that may only be the first lap of the race."

-Victor Reklaitis -Isabel Wang