Crude prices pared losses that earlier on May 8 ran as deep as 4% after U.S. President Donald Trump said the United States will withdraw from the Iran nuclear deal, while the dollar edged off fresh 2018 highs.

Brent futures, the global crude benchmark, briefly turned positive after Trump announced the U.S. withdrawal from the 2015 international agreement aimed at stopping Iran from obtaining a nuclear bomb.

Trump said the United States was reimposing the "highest level of economic sanctions" on Iran, but he did not provide details.

Oil prices plunged earlier as markets were rattled by media reports on doubts over whether Trump would withdraw from the Iran nuclear deal as most had expected.

U.S. crude settled down $1.67 at $69.06 per barrel and Brent settled down $1.32 at $74.85. Both contracts continued to pare losses in post trade.

It was the busiest day in U.S. front-month contracts since August, and for Brent the busiest in almost a month.

Oil prices had been supported by expectations that Trump would pull out of the deal, which could crimp Iranian crude exports and feed geopolitical tensions in the Middle East, home to one-third of the global daily oil supply.

"Trump's announcement had been baked into the cake in recent days, hence we saw prices selling off today given the air of certainty surrounding it," said Matt Smith, director of commodity research at ClipperData.

The most immediate question now is how will Europe and Iran respond? If Europe is successful in negotiating a modified deal with Iran in return for not re-implementing sanctions, particularly around shipping insurance, then the impact on crude oil volumes will be much smaller, Stratas Advisors said in a report following the announcement. Additionally, Russia and China have previously indicated that they would not submit to any U.S. sanctions against Iran and would continue to conduct business with Tehran.

“Practically speaking, the impact on volumes will be minimal in the short term as even with a full reinstatement of sanctions it will take several months of monitoring and wind-down periods before the Treasury Department can start to actively enforce sanctions,” Stratas’ report said. “There also remains the chance that Iran and the remaining signatories are able to strike a deal which effectively continues the JCPOA sans the United States and further minimizes the impact on Iranian exports. Regardless of the physical impact, crude prices will see support from increased geopolitical tension alone.”