Oil prices slipped on Tuesday after a short-lived boost from stronger economic data out of Europe as the market weighed the potential fallout from any fresh U.S. sanctions on Iranian oil exports.
Global benchmark Brent crude oil futures were down 52 cents, or 0.6%, at $86.48 a barrel by 1325 GMT.
U.S. West Texas Intermediate crude futures fell 50 cents, or 0.6%, to $81.40 after dropping as much as $1 to a four-week low.
Both benchmarks had jumped $1 earlier on data showing that overall business activity in the eurozone expanded at its fastest in nearly a year this month, led by a buoyant recovery in the bloc’s dominant service sector.
US crude futures climb back into positive territory
Meanwhile, EU foreign ministers agreed in principle on Monday to expand sanctions on Iran after its missile and drone attack on Israel this month.
The U.S. Senate will begin considering a foreign aid package that includes sanctions on Iran’s oil exports, targeting ships, ports and refineries that handle Iranian oil.
“In a sober market, not drunk on the ‘what ifs’ of a direct war between Israel and Iran, sanctions would almost be tolerable,” said John Evans at oil broker PVM, citing OPEC+ spare capacity and the fact that China imports nearly all of Iran’s crude.
Moreover, Iran and Israel going beyond symbolic attacks “risks the ire of a U.S. that right now has its own political reasons for letting Iranian oil get to water”, Evans added.
Investors are awaiting the release of U.S. gross domestic product figures and March personal consumption expenditure data - the Fed’s preferred inflation gauge - to assess the trajectory of monetary policy.
U.S. crude oil inventories are expected to have increased last week while refined product stockpiles are likely to have fallen, a preliminary Reuters poll of analysts showed.
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