Oil prices experienced a slight increase on Tuesday, following a decline of over 2% in the prior session, as investors assessed the implications of stricter U.S. secondary sanctions imposed on Iran. Brent crude futures increased by 6 cents, representing a 0.1% rise, reaching $92.16 per barrel. Meanwhile, U.S. West Texas Intermediate crude saw an uptick of 15 cents, bringing it to $85.12. Both contracts experienced a decline exceeding 2% on Monday, with U.S. crude reaching a one-week low as investors opted to take profits after a rally that had occurred over the preceding two weeks. U.S. Treasury Secretary Scott Bessent on Monday announced an expansion of sanctions designed to sever Iran’s economic lifeline and compel an end to the conflict between the two nations. He stated that nations would need to cut their commercial connections with Iran or face the possibility of being barred from the dollar-centric financial system.

Bessent refrained from specifying the countries that would be subject to the penalties or indicating when these measures would be implemented. He stated that nations would be afforded a period to adhere to the new directive. U.S. Defence Secretary Pete Hegseth stated on Monday that Washington would not exclude the possibility of employing military force against Iran. However, the U.S. is also shifting toward increased economic pressure, which analysts indicated has alleviated worries regarding potential threats to Middle Eastern oil supplies stemming from the conflict. Tensions persist, however. An oil tanker was struck by an unidentified projectile and disabled on Tuesday northeast of Oman’s Ash Shishah, according to the United Kingdom Maritime Trade Operations. Iran maintains its position that it ought to have control over the strategically significant Strait of Hormuz.

Prior to the onset of hostilities in February, the waterway generally facilitated the transport of cargoes representing approximately 20% of worldwide oil consumption. On Monday, Iran identified 45 tankers that it claimed had breached its regulations for traversing the strait and issued a warning of potential measures against them, including the confiscation of their cargoes. Supply disruptions stemming from the U.S.-Israeli conflict with Iran, initiated on February 28, have compelled nations to deplete their commercial and strategic reserves. The duration of the disruption will be a critical determinant for crude prices. JPMorgan estimates that each additional month of disruption could add approximately $7 to $8 per barrel to Brent prices. If the disruption persists for three months, the bank anticipates average monthly Brent prices to approximate $114 a barrel.

Goldman Sachs has issued a cautionary note indicating that Brent may rise to $120 a barrel should shipping disruptions in the Strait of Hormuz, a critical oil transit route globally, continue. Goldman Sachs anticipates that tensions in the Middle East will ultimately subside in accordance with its base case scenario. The bank forecasts Brent to average $80 a barrel in the fourth quarter and $75 a barrel next year. It indicated that risks continued to be skewed toward the upside, with disruptions in the Strait of Hormuz and the Red Sea possibly enduring for a longer duration than anticipated.