Oil settles down more than 3%; investors shrug off US sanctions on Iran

The shift from military conflict to economic pressure in the U.S.-Israeli war with Iran has reduced some of the oil market's anxiety, said Saxo Bank head of commodity strategy Ole Hansen, adding the U.S. sanctions announcement was not as forceful as some traders had expected.

Treasury Secretary Scott Bessent unveiled the measures on Monday, almost six months into the war. He declined to identify countries targeted or say when penalties would take effect, adding he would give countries time to comply.

The economic pressure campaign has revived expectations of talks between the U.S. and Iran to resolve their conflict, which began when the U.S. and Israel launched military strikes on Tehran at the end of February, oil trading adviser Ritterbusch and Associates said.

There have been signals of a potential return to mediation to end the war. Iran and Oman said they had discussed a proposal on Tuesday for a "joint temporary navigational corridor" through the Strait of Hormuz and a plan to clear the strait of mines.