Crude oil futures rose late Tuesday after President Donald Trump announced that he will pull the U.S. out of the Iran nuclear deal.
U.S. oil prices settled 2.4% lower on the day as Trump avoided immediate sanctions against Iran. Trump said in a speech at the White House that the U.S. will resume the “highest level” of economic sanctions against Iran. The process to reinstate sanctions is subject to 90-day and 180-day wind-down periods, according to the Treasury Department.
West Texas Intermediate crude turned 1.4% higher to $70.05 a barrel in post-settlement trading.
Oil prices have been on a tear, climbing on Monday above $70 a barrel for the first time since 2014 on the possibility that the U.S. would withdraw from the Iran nuclear deal, which could result in a ban of crude oil exports from the country. Iran was allowed to export oil under its 2015 nuclear pact with the U.S. and European nations.
The decline in crude prices Tuesday came as investors digested the news that sanctions would be imposed over a period of time, potentially allowing for negotiations and reducing concern that Iran would need to halt exports immediately.
“We’re ready to negotiate,” Treasury Secretary Steve Mnuchin told Fox News.
While U.S. prices surged in anticipation of a decline in Iran’s exports, most of the Mideast country’s oil is shipped elsewhere.
“Oil-wise, it presents more challenges for Europe than it does [the U.S.],” Scott Martin, chief investment officer of Kingsview Asset Management, told FOX Business’ Trish Regan on “The Intelligence Report” in reaction to Trump’s decision.
Since January 2016, Iran's crude output has risen by around a quarter, or 800,000 barrels per day (bpd), to 3.82 million bpd, making it the sixth-largest oil producer in the world. Most of Iran’s crude is purchased by Asia, according to Reuters.