By Amanda Cooper
Industrial commodities sank after the United States hinted at sanctions relief for Russian aluminium producer Rusal if Oleg Deripaska cedes control of the firm, easing fears Washington might target palladium producer Nornickel.
Aluminium and palladium, a key Russian export, fell more than 5 percent, while oil prices dropped by around $1 a barrel.
Brent crude futures were down 80 cents at $73.26 by 1351 GMT, while U.S. West Texas Intermediate crude futures fell by $1.20 to $67.20.
"Many commodities are selling off following the ... news around Russian Rusal. It's not surprising to see aluminium come off, but oil also appears to be following in the same direction," BNP Paribas' head of commodities strategy Harry Tchilinguirian told the Reuters Global Oil Forum.
Since early 2017, the Organization of the Petroleum Exporting Countries, Russia and other non-OPEC crude producers have curbed output with the aim of eliminating a global oil glut. The pact runs until the end of 2018.
"If oil prices continue to increase, there will be no need to extend the deal," Iran's oil minister Bijan Zanganeh was quoted as saying by SHANA, his ministry's official website.
Oil has risen to its highest since late 2014 this month in part too because of nervousness over a decision President Donald Trump must take on whether to restore U.S. economic sanctions on Iran.
"(Fund managers) need a continuous flow of bullish news for their position to be maintained and this week, it's not a matter of just watching the oil market," Saxo Bank senior manager Ole Hansen said.
Despite slipping on Monday, the oil market remains well supported, especially by strong demand in Asia.
"Added price pressure comes from U.S. sanctions against the key oil exporting nations of Venezuela, Russia and Iran," Kerry Craig, global market strategist at JPMorgan Asset Management, said earlier.
He was referring to the support to oil prices from U.S. sanctions on Russian companies and individuals, as well as on potential new measures against struggling Venezuela and especially OPEC member Iran.
"Stay long oil," JPMorgan said in a separate note.
The United States has until May 12 to decide whether it will leave a nuclear deal with Iran and impose new sanctions against Tehran, including potentially on its oil exports, which would further tighten global supplies.
(Additional reporting by Henning Gloystein in SINGAPORE; Editing by Dale Hudson)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)