Oil drops 4% as traders shrug off US sanctions on Iran

Oil prices fell about 4 percent to a one-week low on Tuesday as traders dismissed the latest U.S. sanctions campaign against Iran, viewing economic pressure as less risky to oil supplies than military escalation. Brent crude futures dropped $3.83, or 4.2 percent, to $88.34 a barrel, while U.S. West Texas Intermediate crude fell $3.34, or 3.9 percent, to $81.67, both hitting their lowest levels since August 17. Treasury Secretary Scott Bessent unveiled the measures Monday but declined to identify targeted countries or specify when penalties would take effect. Analysts called the decline an "overreaction," warning prices could swing higher if Iran retaliates militarily. Iran has vowed to respond, and an oil tanker was struck Tuesday near Oman, while shipping data showed just two tankers transited the Strait of Hormuz on Monday, the lowest daily tally since early May.