Meanwhile, Russia signals a recovery of refining operations to an energy-starved populace: File Image/Pixabay

Profit-taking was cited as the reason for oil trading lower on Monday amid Washington rolling out major sanctions against Iran – and with the underlying supply situation remaining tense as the battle over control of the Strait of Hormuz continued.

As of 1133 GMT, Brent was trading down about 1.7 percent at $92.76 per barrel, and West Texas Intermediate was down about 2 percent at $85.29 per barrel.

Media reported that traders were reducing positions while awaiting U.S. treasury secretary Scott Bessent’s announcement of additional economic sanctions against Tehran, said to be the toughest sanctions ever imposed on the Islamic republic – and which could, ironically, cause oil to skyrocket in the event of further supply limitations or Iranian retaliation.

Later in the session, Bessent unveiled “Operation Economic Outcast,” and stated that China wouldn’t be exempt from the strategy of other countries being penalized if they attempted to help Tehran evade the sanctions.

Bessent said the sanctions target five of Iran’s “most vital lifelines”: digital assets; technology; gold; aviation; and shipping, and added that “This is the economic asphyxiation of this regime.”

Commonwealth Bank of Australia echoed the sentiments of many analysts in expressing mixed feelings about the efficacy of the sanctions designed to collapse the Islamic republic; it stated in a note, “It is unclear whether US policy to economically isolate Iran will prove effective, but if the US measures do work as intended, Iran’s ability to respond via increased violence becomes a growing risk for energy markets to consider.”

But CBA also noted that if oil flows through the Hormuz recovered even modestly, just 50 percent to 60 percent of pre-war transits would be enough to revive expectations of an oversupplied global market.

In other oil news on Monday, Alexander Novak, Russia’s deputy prime minister, told media that some Russian oil refineries have resumed operations after repairs: “The current situation is constantly changing; several refineries are already back in operation, therefore, we're expecting an increase in amounts of supplier taking into account logistics.”