Oil backs off 2014 highs ahead of Trump Iran decision

LONDON, May 8 (Reuters) - Oil retreated from its highest level in 3-1/2 years on Tuesday ahead of an announcement by President Donald Trump later in the day on whether the United States will reimpose sanctions on Iran.

Should Trump pull the United States out of a multi-nation agreement on Tehran's nuclear program, Iranian crude exports might be affected, but analysts said it would also fan the flames of geopolitical tensions in the Middle East, which is home to a third of the world's daily oil supply.

Brent crude futures were down 69 cents at $75.48 a barrel by 1143 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 74 cents to $69.99 a barrel.

Trump said on Monday that a decision on whether to remain in the Iran nuclear deal or to impose sanctions would be announced at 2:00 p.m. EDT (1800 GMT) on Tuesday, four days earlier than expected.

"Until we get more clarity on Trump's intentions, we are unlikely to get further upside on crude," said Virendra Chauhan, oil analyst at Energy Aspects in Singapore.

"If we assume he goes back to 2012 sanctions, we estimate a loss of 0.4 million barrels a day of Iranian supply based on recent Iranian export numbers. Anything larger than this will be bullish," he added.

Trump is likely to either announce he will not be renewing a waiver on sanctions or will restate his opposition to the nuclear agreement, Barclays Research analysts said in a report.

"The geopolitical consequences of a possible dismantling of the (Iran deal) would likely to play a larger and long-lasting role in pushing oil prices higher than short-term policy uncertainty," the bank said.

If Trump restores core U.S. sanctions, under U.S. law he must wait at least 180 days before imposing their furthest-reaching measure, which is to target banks of nations that fail to significantly cut their purchases of Iranian oil.

"If all current importers of Iranian crude oil decide to ask for exemptions and thus continue to import Iranian crude they would still need to reduce imports by 20 percent every 180 days," SEB head of commodity research Bjarne Schieldrop said.

"It will have limited impact on the 2018 balance as it takes time to revive the sanctions. It would hamper investments in Iranian oil resources thus leading to a potentially tighter future oil market. This is probably why we have seen oil prices for longer-dated contracts rise just as much as the front end of the crude oil curve lately."

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.

(Additional reporting by Aaron Sheldrick in TOKYO; Editing by Louise Heavens)