What also matters for oil is if upcoming new U.S. secondary sanctions at some point hit China -Iran's biggest oil buyer

Treasury Secretary Scott Bessent on Monday announced a new round of financial actions aimed at Iran, describing the move as "an economic D-Day."

Global oil prices finished lower on Monday, snapping a six-day win streak but still holding above the $90-a-barrel mark, as traders assessed a pledge from Treasury Secretary Scott Bessent that the U.S. will crack down in new ways on countries that continue to do business with Iran.

Bessent's announcement of the launch of "Operation Economic Outcast," which he also billed as "an economic D-Day" for the Middle Eastern country, featured new sanctions for about 60 Iran-linked entities, but he also said the U.S. is giving other countries time to shut down their interactions with Iran's regime. He defended the Trump administration's decision to not yet impose secondary sanctions on Monday.

But hopes that tougher U.S. sanctions could force Iran to back down helped send oil prices lower on Monday. The most-active West Texas Intermediate crude contract (CL00) (CLV26) for October delivery was down 2.4% to settle at $85.01 per barrel. It was the largest one-day dollar decline in three weeks, and the U.S. benchmark snapped a six-session winning streak.

October Brent crude (BRN00) (BRNV26), the global benchmark, also slipped 2.4% to finish at $92.17 per barrel, also ending a six-day winning streak, according to FactSet data.

"It's going to be so much pressure on Iran that it's unlikely that they are going to be able to survive this over the long run," said Phil Flynn, senior market analyst at the Price Futures Group.

"At the end of the day, the economics risk is going to be too much [for any countries or entities] to stand up against it [the U.S.], so that's why oil is seeing this as another sign that this conflict may come to an end sooner rather than later," he told MarketWatch in a phone interview on Monday afternoon.

Also at stake for oil prices is how much the U.S. sanctions could affect China, and whether Beijing pushes back. China has for years been the biggest buyer of Iranian oil, putting its purchases in the spotlight as the U.S. threatens heavy economic sanctions on Tehran. A sharp decrease in China's oil imports has been pivotal to keeping oil prices lower since the start of the war in Iran.

When asked why Chinese banks are not yet being targeted, Bessent responded at his news conference that "no one is above the reach of U.S. sanctions," but that American officials "find that the best way to engage with countries is through quiet diplomacy, and we are level-setting with every country to tell them our expectations."

The Trump administration is "trying to ratchet up pressure, without triggering significant Iranian action or angering Iran's trading partners (most notably China)," said Gregory Brew, a senior analyst focused on Iran and oil at Eurasia Group, in a social-media post.

On Sunday, the secretary of Iran's Supreme National Security Council, Mohsen Rezaei, said that the country would halt all oil exports through the Strait of Hormuz and the Persian Gulf if U.S. economic pressure continues.

"If the economic war continues, not a single drop of oil will be exported, neither through the Strait of Hormuz nor from anywhere in the Persian Gulf," Rezaei said in a post on X. He added that any participation in U.S. sanctions against Tehran will be treated as "an act of war" against the Iranian people.

To be sure, the concern for the oil market is that Iran could restart lashing out and attacking oil infrastructure in the Middle East and further deepen the oil-supply disruption, but Tehran's ability to attack their neighbors has gone down dramatically since the beginning of the conflict.

"So it's a risk, but not as big of a risk," Flynn said. "The U.S. has a better chance of making sure Iran never produces a barrel of oil than they [Iran] have a shot at shutting down the Strait of Hormuz."

Also in his remarks on Monday, Treasury's Bessent said new determinations on sectoral sanctions issued on Monday are targeting five of Iran's most vital pipelines - digital assets, technology, gold, aviation and shipping.

"I would expect that you will see a major announcement of a financial institution being sanctioned by the end of this week," the Treasury secretary said.

As the conflict between the U.S. and Iran nears the six-month mark, Bessent said in an op-ed in the Financial Times published before Monday's news conference that "an economic D-Day is coming for Iran." He blasted what he called "Iran's enablers" that "purchase and transport its petroleum," saying these nations "now exceed the limits of America's tolerance."

-Victor Reklaitis -Isabel Wang