Oil drops 3% to 12-day low as Iran claims two-year plan to cope with Washington's ‘economic D-Day'

• U.S. Treasury Secretary Scott Bessent described the sanctions initiative as 'the single greatest financial offensive ever,' targeting Iran and countries that continue trading with it
• Iranian Economy Minister Ali Madanizadeh stated Tehran is 'fully prepared' with a two-year plan to manage sanctions, saying 'we have our own tools and we know how to play the game'
• China's Foreign Ministry warned it will 'do everything necessary to firmly safeguard its rights and interests' and opposes sanctions lacking UN Security Council authorization

Market Summary: Oil Drops on Iran Sanctions Despite Supply Concerns

Key Price Movements:

Oil prices fell sharply to 12-day lows on Tuesday, extending Monday's 3% decline. Brent crude dropped 3% to $89.40 per barrel (lowest since August 13), while U.S. crude futures declined 3.2% to $82.32 per barrel.

Main Developments:

The United States launched what Treasury Secretary Scott Bessent called "the single greatest financial offensive ever" against Iran, dubbed "economic D-Day" by the White House. Washington imposed fresh sanctions on Iran and entities trading with the country, targeting Iran's oil revenues and economic infrastructure.

Key Players and Responses:

*Iran:* Economy Minister Ali Madanizadeh stated Tehran is "fully prepared" with a two-year plan to manage the sanctions, claiming "we know how to play the game."

*China:* As one of Iran's largest trading partners, Beijing faces potential ramifications for continuing Iranian oil purchases. Foreign Ministry Spokesperson Lin Jian vowed to "do everything necessary to firmly safeguard its rights and interests," calling the sanctions economic warfare without international legal basis.

*U.S. Military:* Defense Secretary Pete Hegseth warned that kinetic strikes remain an option if Iran "overplays their hand," though economic pressure is currently prioritized.

Market Implications:

Despite heightened geopolitical tensions and typical supply concerns associated with Middle East conflicts—particularly around the Strait of Hormuz—investors sold off oil positions. The price decline suggests markets are betting on effective sanctions enforcement reducing Iranian supply without broader supply disruptions, or anticipating potential demand destruction from economic pressures on major buyers like China.