By Barani Krishnan

Investing.com  — Iran or Russia? Take your pick.

Oil traders went broadly for the first of the two factors in Thursday’s trade, sending crude prices down 2% on the prospect that Tehran could soon resume its nuclear pact with world powers and rescind U.S. sanctions that could legitimately return a million new Iranian barrels or more to the world market. 

But oil’s losses on the day were still limited by escalating Russia-Ukraine tensions, which reached fever-pitch on Thursday on reports of shelling in Eastern Ukraine which were not necessarily related to the conflict between the two sides, said those in the know.

Away from the stand-off point at Ukraine’s borders, Russia continued to engage in a verbal war with the United States and Western allies of Ukraine, which it accused of aggravating the conflict. 

“There are just so many unknowns in the Russian-Ukraine stand-off that each trade might not last beyond the next headline,” said John Kilduff, partner at New York energy hedge fund Again Capital. “Given this extremely challenging circumstances and volatility, traders have opted to keep a limited risk upside on oil — i.e. $90 support — while focusing on the ‘now’ in the trade, which is the possibility of the Iran deal.”

New York-traded, the benchmark U.S. crude oil price, was down $1.90 (or 2%) at $91.76. 

The London-traded oil benchmark, which settled at $92.97, was down 1.9%. 

Reuters reported on a draft of the tentative Iranian agreement it had obtained. It said that there would be several phases in order to get Tehran back on track with its 2015 nuclear deal with world powers. 

Also, it stated that $7 billion of oil receipts sales would be returned first to the Islamic republic before U.S. oil sanctions are lifted.

Reuters stated that although no timeframes have been established for these deals, it was imperative to do so.