Oil prices drop on hopes of US pullback from Iran war

By Colleen Howe

BEIJING, April 2 (Reuters) - Oil prices fell more than $1 early on Thursday as markets awaited an address to the nation by President Donald Trump that could signal a U.S. pullback from the war in Iran.

Brent crude futures LCOc1 fell $1.16, or 1.15%, to $100 per barrel by 1204 GMT. U.S. West Texas Intermediate crude CLc1 futures slipped $1.41, or 1.41%, to $98.71 per barrel. Both benchmarks settled lower in the previous session.

Trump told Reuters on Wednesday, hours ahead of the planned speech at 9 p.m. EDT (0100 GMT on Thursday), that the U.S. will end the war on Iran "fairly soon".

"The overnight sell-off gathered pace on mounting hopes that the Iran conflict could finally be winding down," IG market analyst Tony Sycamore said in a note.

"The market is widely expecting a decidedly dovish tone."

However, a U.S. exit does not guarantee the reopening of the Strait of Hormuz, Sycamore said.

"If the U.S. leaves without a formal ceasefire agreement locking in free passage and leaving its regional allies and their energy assets highly exposed to Iranian strikes, a persistent risk premium is likely to linger in the oil price."

Threats to maritime traffic are growing as the conflict intensifies across the region. Most recently on Wednesday, an oil tanker leased to QatarEnergy was hit by an Iranian cruise missile in Qatari waters, its defence ministry said.

The head of the International Energy Agency cautioned on Wednesday that supply disruptions will start to impact Europe's economy in April. The continent had previously been shielded by cargoes contracted before the war started.