Brent crude oil was down 30 cents at $73.32 a barrel by 0900 GMT. The benchmark contract hit a 3-1/2 year closing high of $75.17 on Monday.
Oil prices steadied on Friday, consolidating after recent gains, as global supplies remained tight and the market awaited news from Washington on possible new U.S. sanctions against Iran.
Brent crude oil was down 30 cents at $73.32 a barrel by 0900 GMT. The benchmark contract hit a 3-1/2 year closing high of $75.17 on Monday. U.S. light crude was 20 cents down at $68.23.
“Rising geopolitical risks have been a big factor behind oil’s strong rise this year,” ANZ analysts Daniel Hynes and Soni Kumari wrote in a note to clients.
“The extent of the rally would have been significantly weaker if not for recent tightness in the market. We expect the market to tighten even further in H2 2018.”
ANZ has a 12-month target for Brent of $80 a barrel. Reuters technical analyst Wang Tao said that the market could re-test a price support level at $72.39 a barrel after peaking around resistance at $75.45. Oil traders are concerned that sanctions against Iran could cut oil supplies.
Iran’s foreign minister said on Thursday that U.S. demands to change its 2015 nuclear agreement with world powers were unacceptable as a deadline set by President Donald Trump for Europeans to “fix” the deal loomed.
Trump has said that unless European allies rectify the “terrible flaws” in the international accord by May 12, he will refuse to extend U.S. sanctions relief for the oil-producing Islamic Republic.
“Prices reflect a premium for Iran uncertainties. Investors are worried about supplies after Iran took a tough stance in its response to the United States,” said Wang Xiao, head of crude research with Guotai Junan Futures.
European powers still want to hand Trump a plan to save the Iran nuclear deal next week. But they have also started work on protecting E.U.-Iranian business ties if the U.S. president makes good on a threat to withdraw.
Iran resumed its role as a major oil exporter in January 2016 when international sanctions against Tehran were lifted in return for curbs on Iran’s nuclear programme. Aside from security concerns, growing U.S. crude supplies are capping price gains.
Surging production in the Permian shale basin is outpacing pipeline capacity, while local refining issues have exacerbated oversupply in the region. The United States now produces more crude oil than top exporter Saudi Arabia.
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