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Oil prices continued to drop on Tuesday, on the heels of a late-session selloff in the U.S., as investors awaited a decision from President Donald Trump on the Iranian nuclear deal.
The U.S.’s allies in Europe were preparing for a withdrawal, though some officials there hoped Trump would move slowly to reapply sanctions, which would leave more time for negotiations.
On Monday, prices soared to levels not seen since late 2014 as investors bet that Trump would pull the U.S. out of the agreement, which lifted economic sanctions on Iran in return for restrictions on the country’s nuclear program. Such a move would cut global supply by making it tough for Iran to export oil.
However, late Monday, investors began to cash in some on those big bets, and oil started to sell off, after Trump said in a post to Twitter that he would announce his decision at 2 p.m. Tuesday, four days ahead of the May 12 deadline.
I will be announcing my decision on the Iran Deal tomorrow from the White House at 2:00pm.
— Donald J. Trump (@realDonaldTrump) May 7, 2018
On Tuesday, June West Texas Intermediate crude oil was down 86 cents, or 1.2%, to $69.88 a barrel. Futures closed 1.5% higher at $70.73 a barrel on Monday, the highest settlement for a front-month contract since Nov. 26, 2014, according to FactSet data.
International benchmark July Brent crude meanwhile, fell 75 cents, or 1%, to $75.42 a barrel. On Monday, the contract finished up 1.7% to $76.17 — also the highest finish since late November 2014.
Iran, meanwhile, remains defiant. The country’s state-run oil company (NIOC) has mechanisms to sell Iran’s oil and “has creatively preserved them after four decades of being targeted by the sanctions,” said Amir Hossein Zamani-nia, Iran’s deputy petroleum minister for international affairs and trading on Monday, according to SHANA, the oil ministry’s news service.
“Looking beyond this week, a decision to leave the Iran deal can only be long-term bullish, but it is likely that much of the recent strength in oil comes from the strong demand backdrop and the continuing deterioration in Venezuela’s oil industry,” said Michael Cohen and a team of commodities analysts at Barclays, in a note to clients.
Among other energy products traded on Nymex, June gasoline fell 1% to $2.113 a gallon, while June heating oil dropped 0.8% to $2.167 a gallon. June natural gas slipped 0.3% to $2.734 per million British thermal units.