Oil prices fell on Wednesday amid signs that global markets remain adequately supplied, despite a jump to 2019 highs this week on Washington’s push for tighter sanctions against Iran.
Brent crude futures were at $74.17 per barrel at 0637 GMT, down 34 cents, or 0.5 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $65.96 per barrel, down 34 cents, or 0.5 percent, from their previous settlement.
Crude oil prices for spot delivery rose to 2019 highs earlier in the week after the United States said on Monday it would end all exemptions for sanctions against Iran, demanding countries halt oil imports from Tehran from May or face punitive action from Washington.
The spot price surge has put the Brent forward curve into steep backwardation, in which prices for later delivery are cheaper than for prompt dispatch.
Stephen Schork of the Schork Report energy newsletter, said the shift to backwardation in the past four months was “a sign that the market’s underlying fundamentals have shifted away from a spot market that is well supplied to a market where demand is beginning to overtake supply.”
US sanctions against oil exporter Iran were introduced in November 2018, but Washington allowed its largest buyers limited imports of crude for another half-year as an adjustment period.
With Iranian oil exports likely declining sharply from May as most countries bow to US pressure, global crude markets are expected to tighten in the short-run, Goldman Sachs and Barclays bank said this week.
Despite the tight spot market, analysts said global oil markets remained adequately supplied for now thanks to ample spare capacity from the Middle East-dominated Organization of the Petroleum Exporting Countries (Opec), Russia and also the United States.
“Others are more than able (and willing) to step into the void that will be left if and when Iran’s exports drop down to zero, as the US hopes,” said Matt Stanley, a broker with Starfuels in Dubai.