Oil prices drop to erase gains from OPEC's production cuts as US potentially nears deal with Iran to allow oil exports

• Oil prices fell on Thursday after media reports suggested that the US was close to reaching a nuclear deal with Iran.
• The potential deal would lift some sanctions for Iran and allow the country to export its oil.
• Oil markets have been whiplashed in recent weeks as OPEC looks to boost prices by cutting production.

US crude oil prices plunged as much as 5% to below $70 per barrel on Thursday after media reports suggested that the US was making progress towards a nuclear deal with Iran.

The swift decline briefly erased all of the gains that were recently sparked by OPEC's decision to cut its planned oil production for the rest of the year.

According to a report from Israel's Haaretz and other regional media outlets, a potential deal would see the US lifting its oil export sanctions on Iran, allowing the country to ship up to 1 million barrels of its daily crude production in exchange for it to stop enriching uranium.

A deal could be reached within weeks, and Israeli defense officials said talks between the US and Iran are moving faster than expected, according to the report.

Iran has long been one of the world's top oil producers and has a large stockpile of crude that's currently sitting in storage. The country used to be OPEC's second-largest producing country, so any deal to lift export sanctions could seriously impact the current oil supply dynamic.

Meanwhile, Saudi Arabia needs higher oil prices to help sustain its high rate of spending on mega projects, with some estimates suggesting the country needs prices above $81 per barrel to breakeven on its current budget plans. And Russia needs higher oil prices to help fund its war on Ukraine.

But the White House denied reports that it was nearing a deal with Iran for it to curb its uranium enrichment in exchange for some relief in sanctions.

"This report is false and misleading," a spokesperson for the White House National Security Council said.

West Texas Intermediate crude prices pared losses to about 1.5% following the denial from the White House to $71.53 per barrel.

The US and other world powers entered into the Iran nuclear deal during the Obama administration to freeze Tehran's weapons program. But President Donald Trump withdrew from it, reimposing economic sanctions. Since Joe Biden became president, he has tried to revive the deal.