Oil prices fell Monday as investors awaited details on a new US sanctions package targeting Iran, which Washington has described as its toughest-ever economic campaign against Tehran.

West Texas Intermediate futures fell about 1.3% to $85.93 a barrel, while Brent crude declined 1.24% to $93.22.

US Treasury Secretary Scott Bessent is due to announce the measures later Monday.

"At dawn begins an economic D-Day — the single greatest financial offensive ever marshaled against an adversary," Bessent said on the US social media platform X.

He previously said that Washington sought to "collapse" the Islamic Republic through the "toughest sanctions in history."

President Donald Trump has also threatened the "most crushing economic operation ever taken against any country" and warned of severe penalties for countries helping Iran evade sanctions.

Tehran has rejected the pressure. The Islamic Revolutionary Guard Corps said Iran has ways "to counter the adverse effects of the enemy's war" and can "easily establish economic relations with countries," according to Iranian state media.

Commonwealth Bank of Australia (CBA) said oil prices could remain volatile through the second half of 2026, with Brent expected to trade between $70 and $100 a barrel.

"It is unclear whether US policy to economically isolate Iran will prove effective. But if the US measures do work as intended, Iran's ability to respond via increased violence becomes a growing risk for energy markets to consider," the bank said in a Monday note.

CBA added that even a partial recovery in oil flows through the Strait of Hormuz could push prices toward the lower end of its forecast range by reviving expectations of a global supply surplus. (AA)