London (AFP) – Oil prices dropped on Tuesday from 3.5-year highs as investors awaited a decision on Iran’s nuclear deal from US President Donald Trump.
Stocks diverged and the dollar climbed on other markets.
“Decision Day for President Donald Trump and the Iran nuclear deal, saw oil prices pulling back further from 3.5-year highs as signs that the US may consent to a ‘fudge’ proposal that’s been the subject of furious diplomatic activity for weeks,” noted Ken Odeluga, market analyst at City Index trading group.
The US president is due at 1800 GMT to announce whether or not to tear up an agreement with Tehran and reimpose painful sanctions that could cut off crude supplies.
Despite being urged by world leaders to keep it in place, there is a general consensus that he will refuse to preserve the 2015 pact, fanning fears of fresh turmoil in the already tinderbox Middle East.
This — along with an output cap by Russia and OPEC, rising US demand and an improving economy — has helped send the price of oil to highs not seen since late 2014, though profit-taking saw both main contracts retreat Tuesday.
“Oil has raced higher recently on the back of concerns that President Trump will exit the US from the Iran nuclear deal and that this would then lead to a further deterioration in the situation in the Middle East not to mention the disruption to oil supplies of Iran’s production,” said Greg McKenna, chief market strategist at AxiTrader.
He added that there was a “perfect storm for higher prices” owing to crude-rich Venezuela’s economic woes, which have been made worse by fresh US sanctions.
However, Stephen Innes, head of Asia-Pacific trade at OANDA, said “we could be on for significant knee-jerk reaction (sending prices down) if the president walks back the more boisterous elements of hawkish Iran rhetoric”.
Iran has said Washington will regret it “like never before” if Trump walks away from the deal.
– Key figures around 1045 GMT –
Oil – Brent North Sea: DOWN 81 cents at $75.36 per barrel
Oil – West Texas Intermediate: DOWN 94 cents at $69.79
London – FTSE 100: FLAT at 7,569.14 points
Frankfurt – DAX 30: DOWN 0.6 percent at 12,874.59
Paris – CAC 40: DOWN 0.6 percent at 5,501.05
EURO STOXX 50: DOWN 0.5 percent at 3,545.28
Tokyo – Nikkei 225: UP 0.2 percent at 22,508.69 (close)
Hong Kong – Hang Seng: UP 1.4 percent at 30,402.81 (close)
Shanghai – Composite: UP 0.8 percent at 3,161.50 (close)
Euro/dollar: DOWN at $1.1872 from $1.1922 at 2100 GMT
Pound/dollar: DOWN at $1.3512 from $1.3556
Dollar/yen: DOWN at 108.94 yen from 109.07 yen
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