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Global crude oil futures tumbled sharply on Tuesday, extending Monday’s retreat to settle more than 3% lower as energy markets reassessed geopolitical risk premiums following Washington’s rollout of secondary sanctions on Iran.

International benchmark Brent crude shed $3.59, or 3.90%, to settle at $88.58 a barrel—its weakest close since 14 August.

US West Texas Intermediate (WTI) fell $2.65, or 3.12%, to close at $82.36 a barrel, marking its lowest settlement since 13 August.

The two-day downward momentum erased the bulk of the previous week’s gains, driven by trader perception that Washington’s pivot toward economic measures poses less immediate risk to physical supply than direct military escalation. The secondary sanctions outlined by US Treasury Secretary Scott Bessent offered compliance grace periods and lacked immediate country-specific designations, triggering broad profit-taking.

Market sentiment softened further on emerging diplomatic signals, notably bilateral talks between Iran and Oman concerning a proposed joint temporary navigational corridor and de-mining initiatives through the Strait of Hormuz.

Physical supply bottlenecks and security friction nevertheless remain an active baseline risk. Vessel transits through the Strait of Hormuz slumped to just two tankers on Monday—the lowest daily tally since early May—whilst maritime security agencies reported an oil tanker disabled by an unidentified projectile off Oman’s coast on Tuesday.

Additionally, key buyers, led by China, reaffirmed that energy cooperation with Tehran proceeds under international legal frameworks, limiting near-term volume displacement.

Written by: Aiman Haikal