NEW YORK (Reuters) - Oil prices dived as much as 4 percent on Tuesday as media reports rattled markets with doubts about whether U.S. President Donald Trump would withdraw Washington from the Iran nuclear deal as most had expected.
A CNN report first raised doubts about whether Trump would impose sanctions as quickly as the market had expected, a decision that would reduce global crude supplies and feed tensions in the Middle East.
The New York Times reported that Trump told President Emmanuel Macron of France that he planned to reinstate all sanctions and impose additional economic penalties. In answer to a Reuters question, Macron’s office denied the Times story, which cited a person briefed on the matter.
“There’s been some conflicting comments come out of CNN that were bearish, and then countered by the New York Times that were less bearish,” said Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates.
“So we’re just getting a lot of this pre-meaning noise that we often get when things... kind of get leaked ahead of time.”
Brent crude futures LCOc1 were down 2.3 percent at $74.42 a barrel by 12:35 p.m. EDT (1635 GMT), while U.S. West Texas Intermediate (WTI) crude futures CLc1 fell 2.8 percent to $68.73.
Trump on Monday said a decision on Iran would be announced at 2 p.m. EDT (1800 GMT) on Tuesday.
Prices fell as much as 4 percent after the CNN report said Trump was expected to impose sanctions but may also allow for “a grace period that may offer the deal’s proponents an opening to negotiate.”
One senior European official closely involved in Iran diplomacy told Reuters U.S. officials had indicated late on Monday that Trump would withdraw, but it remained unclear on what terms and whether sanctions would be reimposed.
Oil prices had been supported by expectations that Trump would pull out of the deal, which could hit Iranian crude exports and feed geopolitical tensions in the Middle East, home to a third of the world’s daily oil supply.
Under the deal to limit Iran’s nuclear program, formally known as the Joint Comprehensive Plan of Action, the United States agreed to ease a series of sanctions on Iran and has done so under a string of “waivers” that effectively suspend them.
Market participants said oil was also pressured by strength in the U.S. dollar, which advanced to its highest level of 2018 against a basket of currencies .DXY on safe-haven buying.
“If the dollar continues to rally from here, regardless of what Trump does with this Iran deal, any gains (for oil) are going to be short-lived as the greatest risk here is the risk of the dollar,” said Brian LaRose, technical analyst at United-ICAP.
Additional reporting by Devika Krishna Kumar in New York, Amanda Cooper in LONDON and Aaron Sheldrick in TOKYO; Editing by David Gregorio
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