LONDON: Oil prices reached fresh 3.5-year highs on Thursday, before profit taking took hold, amid expectations that US President Donald Trump's decision to tear up the Iran nuclear deal will lead to tighter crude supplies.
The president's announcement earlier this week over Iran, a major producer of crude oil, has helped light a fire under the commodity, with both main oil futures contracts striking highs not seen since the end of November 2014 and speculation rampant they could go even higher.
"In the aftermath of Donald Trump's announcement on the Iran nuclear deal, oil has continued to rally on Thursday although the gains the are being made are now slowing," noted Craig Erlam, senior market analyst at Oanda trading group.
"While it remains unclear what impact the sanctions -- which are not backed by the other countries that signed up to the initial agreement -- will have on output, the moves we've so far seen suggest there is a belief it will be significant."
Trump's decision Tuesday meanwhile came as data shows US stockpiles are dwindling, major producer Venezuela is wracked by economic upheaval, and OPEC and Russia press on with an output cap.
On other markets Thursday, the British pound slid after the Bank of England (BoE) held its key interest rate at 0.50 percent and slashed the growth forecast for the British economy less than one year before Brexit.
"The pound has suffered steep losses once again against the dollar and other major counterparts on Thursday after the Bank of England kept interest rates unchanged as expected," said FXTM research analyst Lukman Otunuga.
The BoE now sees the British economy growing by 1.4 percent this year, compared to an earlier forecast of 1.8 percent growth, and inflation to fall more quickly.
Otunuga said this provides "less reason to believe that the BoE will be in a hurry to raise UK interest rates", expectations of which had been supporting the value of the pound.
European stocks were narrowly mixed, while Wall Street opened higher.
"US stocks are adding to yesterday's solid advance in early action, with consumer price inflation coming in cooler than expected, while trade and geopolitical concerns remain relatively in check," said analysts at Charles Schwab brokerage.
US consumer prices rose by 0.2 percent in March, while analysts had been expecting a stronger gain of 0.3 percent.
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