Oil prices took a breather on Wednesday (Feb 23) after surging to seven-year highs in the previous session as it became clear the first wave of US and European sanctions on Russia for sending troops into eastern Ukraine would not disrupt oil supply.
At the same time, the potential return of more Iranian crude to the market, with Tehran and world powers close to reviving a nuclear agreement, also kept a lid on prices, which hit seven-year highs in the previous session.
Brent crude fell 13 cents, or 0.1%, to US$96.71 (abour RM404.76) a barrel at 0142 GMT, after soaring as high as US$99.50 on Tuesday, the highest since September 2014.
US West Texas Intermediate crude futures fell six cents, or 0.1%, to US$91.85 a barrel after hitting US$96 on Tuesday.
Prices jumped on Tuesday on worries that western sanctions on Russia for sending troops into two breakaway regions in eastern Ukraine could hit energy supplies, but the US made it clear there would be no impact on energy exports.
"The sanctions that are being imposed today (Tuesday) as well that could be imposed in the near future are not targeting and will not target oil and gas flows," a senior US State Department official told reporters late on Tuesday.
Sanctions imposed by the US, Britain and the European Union on Tuesday were focused on Russian banks.
Further dampening prices was the possible return of more than one million barrels per day of crude from Iran as diplomats said Iran and world powers were on the verge of reaching an agreement to curb Tehran's nuclear programme.
"Diplomats agree that negotiations have reached the endgame, signalling potential relief for global oil markets," ANZ Research analysts said in a note.
The big unknown is how quickly Iran could actually boost its exports, Commonwealth Bank commodities analyst Vivek Dhar said.
Other members of the Organization of the Petroleum Exporting Countries and their allies, together called OPEC+, had struggled to meet their production targets due to underinvestment in oil infrastructure, and Iran could face the same issue, he said.
Source: The Edge Markets