Oil prices retreated from 3-1/2 year highs on Tuesday as investors waited on an announcement by President Donald Trump on whether the United States will reimpose sanctions on Iran. Should Trump pull the United States out of a multi-nation agreement on Tehran's nuclear programme, Iranian crude exports could be hit, adding to tightness in the oil market, which is coming back into balance after years of glut.
US West Texas Intermediate (WTI) crude futures had dropped 73 cents, or 1 per cent, to $70 a barrel by 0240 GMT. At one point they fell below $70, after settling above that level for the first time since November 2014 on Monday. Brent crude futures were down 63 cents, or 0.8 per cent, at $75.54, having jumped 1.7 per cent to settle at $76.17 a barrel in the previous session.
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If Trump restores core US sanctions, under US law he must wait at least 180 days before imposing their furthest-reaching measure, which is to target banks of nations that fail to significantly cut their purchases of Iranian oil.
Analysts at RBC Capital Markets said Iran's exports could be cut by 200,000 to 300,000 bpd as a result. Iranian officials, however, said that the country's oil industry would continue to develop even if the United States exits the accord.
Under the deal to limit Iran's nuclear pogramme, formally known as the Joint Comprehensive Plan of Action, the US agreed to ease a series of sanctions on Iran and has done so under a string of “waivers” that effectively suspend them. Trump has repeatedly threatened to withdraw from the deal, unless France, Germany and Britain - which also signed the agreement - fix what he has called its flaws.