By Alison Sider and Sarah McFarlane 

Oil prices tumbled Tuesday after hitting more than three-year highs as investors re-evaluated the fate of the Iran nuclear deal, a move that could tighten markets.

U.S. crude futures fell 94 cents, or 1.37%, to $67.70 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 85 cents, or 1.14%, to $73.86 a barrel on ICE Futures Europe, snapping a five session winning streak.

The prospect that the U.S. will soon pull out of the deal, triggering renewed sanctions that could curb Iranian production and tighten the oil market, helped push Brent as high as $75.47 a barrel in earlier trading, the highest since 2014.

The U.S. is due to review its position on the agreement -- which eased sanctions on the Islamic Republic in return for curbs on its nuclear program -- on May 12.

Market participants parsed mixed statements about the prospects for the Iran deal throughout the day Tuesday as President Donald Trump met with French President Emmanuel Macron, who has pushed for the U.S. to remain in the nuclear pact.

The Trump administration has vowed to pull out of the nuclear accord unless European allies agree to address administration concerns, and Mr. Trump offered tough rhetoric about the deal, describing it as "insane" and saying "it should have never been made."

But later in the day the two leaders indicated that they were closer to an understanding, which prompted oil prices to sell off sharply.

"That would calm the waters in a big way," said John Kilduff, founding partner of Again Capital.

Mr. Macron said he wanted to work with Mr. Trump on a new deal.

Oil investors have become increasingly preoccupied with the deal as the May 12 deadline approaches. In the past, sanctions have curbed Iranian oil exports by around 1 million barrels a day, and global oil supplies are already tight after more than a year of production cuts by the Organization of the Petroleum Exporting Countries and other producers.

"Let's assume he will withdraw from the deal on May 12; we don't know how much volume will be lost, we might see the $80 level for Brent," said Giovanni Staunovo, a commodities analyst at UBS Wealth Management.

Mr. Trump will meet with Germany's leader Angela Merkel later in the week. She is also expected to push for the U.S. to remain on board with the Iran deal.

"One can always count on President Trump's infamous unpredictability but currently all bets are off on the U.S. staying in the nuclear agreement, " said Tamas Varga, analyst at brokerage PVM.

Oil prices have risen by around 45% over the past year, buoyed by a combination of factors including tightening supplies, strong demand, and heightened geopolitical tensions between major oil producers including Saudi Arabia and Iran.

Stock indexes also sold off sharply Tuesday amid some disappointing earnings reports from industrial giants and rising government yields.

"We definitely go through periods where oil and stocks move in lockstep -- who knows which was driving the other, but they did seem to be going down in lockstep today," said Michael Hiley, head of over-the-counter energy trading at LPS Futures.

Oil market participants are also looking ahead to data on U.S. oil stockpiles due Wednesday from the U.S. Energy Information Administration. Analysts surveyed by The Wall Street Journal are expecting data to show stockpiles fell by 1.7 million barrels last week.

The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week showed a 1.1-million-barrel increase in crude supplies, a 2.7-million-barrel fall in gasoline stocks and an 1.9-million-barrel decrease in distillate inventories, according to a market participant.

Gasoline futures fell 1.36% to $2.0949 a gallon. Diesel futures fell 0.62% to $2.1276 a gallon.

Write to Alison Sider at alison.sider@wsj.com and Sarah McFarlane at sarah.mcfarlane@wsj.com

(END) Dow Jones Newswires

April 24, 2018 16:58 ET (20:58 GMT)