Oil prices tumbled as much as 3 percent on Thursday, pulling back sharply after rallying to four-year highs on concerns about the fallout of U.S. sanctions on Iran, OPEC's third biggest crude producer.
International benchmark Brent crude futures fell $1.65, or 1.9 percent, to $84.64 a barrel by 2:29 p.m. ET. The contract hit a nearly four-year high of $86.74 on Wednesday.
U.S. crude futures ended Thursday's session down $2.08, or 2.7 percent, at $74.33, after hitting $76.90 on Wednesday, the highest level since November 2014.
On Wednesday, Brent climbed to the most technically overbought level since February 2012, while WTI inched higher to the most overbought since January. The relative strength index of both contracts rose this week to above 70, a technical level often regarded as signaling a market that has risen too far.
"The market was a bit over-extended on a short-term basis," said Brian LaRose, senior technical analyst at ICAP-TA.
"I would need to see both $84.35 and $82.85 broken (for Brent) to suggest that something more than just a minor rest stop in an ongoing uptrend is likely to take place here."
Also weighing on oil prices, Cushing, Oklahoma, crude inventories rose about 1.7 million barrels from Sept. 28 to Tuesday, traders said, citing a report from market intelligence firm Genscape.