By early afternoon in Europe, benchmark crude for February delivery was down 27 cents to $101.07 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.66 to settle at $101.34 in New York on Tuesday.
In London, Brent crude was down 77 cents to $108.50 a barrel on the ICE Futures exchange.
Iran’s official news agency IRNA reported Tuesday that Vice President Mohamed Reza Rahimi said his country will close the Strait of Hormuz, cutting off oil exports, if Western nations impose sanctions on Iran’s oil shipments.
The U.S., the U.K. and other nations are mulling more sanctions against Iran, the world’s fourth-largest oil producer, over concern about its nuclear power program.
The Strait of Hormuz, the choke point of the Persian Gulf, is one of the world’s busiest routes for crude shipments with about a sixth of the world’s oil production passing through.
If tankers could not use the strait, they would have to take longer, more expensive routes to their destinations, which would likely boost prices.
“We doubt political posturing will turn into action, but oil remains above $100 regardless,” energy consultant and trader The Schork Group said in a report.
Schork estimates crude would jump to above $140 if Iran closed the Strait of Hormuz.
“Shutting down the strait ... is the last bullet that Iran has and therefore we have to express some doubt that they would do this and at the same time lose their support from China and Russia,” said analyst Olivier Jakob of Petromatrix in Switzerland.
Signs the U.S. economy is improving also helped bolster crude. The New York-based Conference Board said its Consumer Confidence Index jumped almost 10 points from November, to 64.5, the highest since April.
The National Retail Federation said it expects a 3.8 percent increase in Christmas holiday sales, up from its forecast of 2.8 percent in September.
Wednesday’s retreat could end six consecutive sessions of higher oil prices, the longest streak in over a year.
“We saw some small correction lower in the oil market, as investors were prompted to some profit-taking to lock in recent gains,” said a report from Sucden Financial in London.
In other Nymex trading, heating oil rose 0.11 cent to $2.9170 per gallon and gasoline futures slid 1.78 cents at $2.6632 per gallon. Natural gas was down 1.8 cents to $3.132 per 1,000 cubic feet. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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