09:17 AM EDT, 03/20/2026 (MT Newswires) -- Oil traded lower early Friday as the United States mulls taking steps to free up additional supply by lifting sanctions on Iranian tankers already at sea.

West Texas Intermediate crude oil for April delivery was last seen down $1.38 to US$94.17 per barrel, while May Brent oil dropped US$1.87 to US$106.78.

The drop comes as U.S. Treasury Secretary Scott Bessent on Thursday said the Trump Administration is considering lifting sanctions on Iranian tankers already loaded and at sea, a step he said would release 140-million barrels of supply to the market, according to Bloomberg.

The United States is looking to check oil prices that have surged following its joint attack with Israel on Iran that began on February 28. Iran responded with closing off the Strait of Hormuz, the chokepoint for oil and gas exports that account for 20% of daily oil demand. Iran has also attacked the oil and gas infrastructure of its Persian Gulf neighbors, threatening a sustained supply loss even if the Strait is reopened, while the war continues to disrupt markets.

"President Trump's options for lowering energy prices have been limited, with Iran effectively in control of the Strait of Hormuz and the weekend's US strike on Kharg Island military complexes failing to change its calculus regarding this critical waterway. Administration officials have spent considerable manhours working to convey to market participants that the disruption will be short-lived as the war will soon wind down. And yet, nothing points to a limited engagement at this juncture," Helima Croft, Head of Global Commodity Strategy and MENA Research at RBC Capital Markets wrote.

UBS on Friday raised its oil price forecast due to the supply disruption, expecting Brent oil to average US$86.00 over 2026, up US$14.00 over its prior estimate, while raising its 2027 forecast by US$10.00 to US$80.00.

"This is based on an assumption that the conflict continues for another 2-3 weeks until early April and that flows via the Strait of Hormuz remain severely reduced, briefly pushing prices above $120/bbl. We assume no damage to major fields or terminals and a gradual resumption of flows via Hormuz from April but not full normalisation, driving Brent down to $100/bbl average in 2Q26. The higher risk premium and need to refill inventories mean that we see prices staying higher through 2027," the investment bank said.