Oil prices fell on Thursday, reversing gains seen earlier in Asia, as market participants assessed the U.S. decision to remove personnel from the Middle East ahead of talks with Iran over Tehran's nuclear activities.
Brent crude futures fell 73 cents, or 1.1%, to $69.04 a barrel by 0901 GMT, while U.S. West Texas Intermediate crude fell 66 cents, or 1%, to $67.49 a barrel.
Both Brent and WTI jumped more than 4% to their highest levels since early April a day earlier.
U.S. President Donald Trump said the U.S. was removing personnel because the Middle East "can be a dangerous place." He also said the U.S. would not allow Iran to have a nuclear weapon. Iran says its nuclear activities are peaceful.
The escalating tensions with Iran have raised the prospect of disruptions to oil supplies. The two sides are due to meet on Sunday.
"For the oil market, the real nightmare would be the closure of the Strait of Hormuz," Global Risk Management analyst Arne Rasmussen said in a LinkedIn post.
"If Iran were to block this chokepoint, it could affect up to 20% of global oil flows," he added.
On Wednesday, Britain's maritime agency warned that rising tensions in the region could lead to an escalation in military activity that could impact shipping in the critical waterway.
It advised ships to exercise caution when traveling through the Gulf, the Gulf of Oman and the Strait of Hormuz, all of which border Iran.
Meanwhile, the US is preparing to partially evacuate its embassy in Iraq and will allow military dependents to leave locations in the Middle East due to heightened security risks in the region, Reuters reported on Wednesday, citing US and Iraqi sources.
Iraq is the second-largest crude producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia.
Military dependents could also leave Bahrain, a US official said.
Prices weakened after hitting a key technical resistance level during Wednesday's rally, with some market participants betting on a US-Iran meeting on Sunday that would result in a de-escalation of tensions, said Kelvin Wong, senior market analyst at OANDA.
Trump has repeatedly said the US would bomb Iran if the two countries cannot reach a deal on Iran's nuclear activities including uranium enrichment.
Iranian Defense Minister Aziz Nasirzadeh said on Wednesday that Iran would attack US bases in the region if talks failed and if the US started a conflict.
US Special Envoy Steve Witkoff plans to meet Iranian Foreign Minister Abbas Araghchi in Oman on Sunday to discuss Iran's response to the US proposal for a deal.
The Board of Governors of the 35-nation UN nuclear watchdog declared Iran in violation of its non-proliferation obligations on Thursday for the first time in nearly 20 years, raising the prospect of it being reported to the UN Security Council. (alg)
Source: Reuters
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