The bell is ringing: oil prices wait for Trump’s decision

Global oil prices retreated from near four-year highs Tuesday as investors await a statement from U.S. President Donald Trump that could lead to new sanctions on Iran, the world’s fifth-largest producer, and crimp supply in market that is already affected by OPEC production limits.

Trump said Monday that he would make a statement on the sanctions, which link to alleged violations of a 2015 treaty that was designed to curb Tehran’s nuclear program, at 2:00 pm eastern time at the White House later today and four days ahead of the May 12 deadline embedded in the agreement. Iran, which pumps around 3.8 million barrels of crude each day, could see international markets for its oil reduced as a result of the sanctions, with experts estimating that as many as 500,000 barrels of oil could be pulled from the market each day.

The 2015 accord lifted economic sanctions on Iran in exchange for the country limiting its nuclear program and allowing regular inspections of its to atomic facilities. The United States agreed to those terms, and Iran does not appear to have violated the deal, but the Trump administration has said it wants to scrap the agreement.

U.S. crude futures, which had topped the $70 per barrel mark in the last session for the first time since end-2014, had slid 1.2 percent to around $69.88. Brent crude futures were down 1.01 percent at $75.40.

Iran’s oil production has bounced back to nearly 4m barrels a day since world powers eased sanctions over its nuclear programme. Reimposing sanctions could reduce Iranian oil exports by 200,000-300,000 barrels a day, according to RBC Capital Markets.

Robust demand propelled by solid global economic growth, along with cuts in output co-ordinated by the Opec cartel, has diminished surplus oil stocks and left the market more sensitive to shocks.

Global oil price action, however, could be difficult to determine in the weeks and months ahead even if the President reverts to 2012 sanctions — which were supported at the time by Britain and the European Union — given the lack of international support for a similar move today.

Both Germany and France have said they will honor the 2015 treaty while Kremlin spokesperson Dmitry Peskov told reporters in Moscow Tuesday that withdrawing from the agreement would have “inevitable harmful consequences.”

Trump would also need to use the full force of U.S. law, which allows for the targeting of international banks that finance the purchase of sanctioned Iranian crude, if he decides to fully impose commercial limits on Tehran.