Oil prices slump as U.S. sanctions threat replaces military action fears

International oil prices dropped more than 3 percent on Tuesday, 25 August, as global markets reacted to a shift in U.S. strategy toward Iran. Brent North Sea Crude fell 3.9 percent to $88.58 per barrel, dropping below the $90 threshold for the first time in weeks, while West Texas Intermediate settled 3.1 percent lower at $82.36. Sanctions replace military threat The price correction follows an announcement from U.S. Treasury Secretary Scott Bessent, who declared an "economic D-Day" against Iran and its trade partners. However, the lack of a specific timeline or a list of targeted nations led traders to conclude that the immediate risk of renewed military strikes has receded. Markets were further calmed by reports from Pakistan Interior Minister Mohsin Naqvi, who described "productive" diplomatic talks with the Iranian presidency on Monday, 24 August. The de-escalation in rhetoric offered relief to energy markets that had been strained by the ongoing deadlock regarding the Strait of Hormuz. While oil slumped, Wall Street responded positively; the S&P 500 rose 0.3 percent and the Nasdaq advanced 0.7 percent. In Europe, the Frankfurt DAX gained 0.6 percent following data showing stronger-than-expected German growth in the second quarter. Nvidia results and central bank outlook The market shift comes as investors prepare for two major catalysts later this week. On Wednesday, 26 August, AI chipmaker Nvidia is scheduled to release quarterly earnings, a report widely viewed as a…