UPDATE 5-Oil prices drop after U.S. lifts sanctions on one Iranian oil official

(New throughout, updates latest prices, Libya pipe leak, OPEC demand forecast, changes dateline to New York)

NEW YORK, June 10 (Reuters) - Oil prices fell on Thursday, reversing early gains as traders were spooked by incorrect reports that the United States lifted sanctions on Iranian “oil officials.”

Both U.S. and Brent futures dropped sharply on the initial reports and then pared losses after the market learned that the U.S. Treasury Department removed just one National Iranian Oil Company official from its sanctions list.

The Treasury’s website had different spellings in the official’s name. It also sanctioned numerous other people in several countries.

A U.S. official told Reuters that the activity was “routine” and not related to talks with Iran over reviving the 2015 deal to restrict its nuclear weapons development.

The action caused markets to slump before rebounding. As of 12:43 p.m. EDT (1643 GMT), Brent futures were down 19 cents, or 0.3%, to $72.08 a barrel while U.S. West Texas Intermediate (WTI) crude fell 16 cents to $69.80.

Before the fall in prices, Brent was on track for its highest close since May 2019 and WTI on track for its highest close since October 2018. (Additional reporting by Julia Payne in London and Jessica Jaganathan in Singapore; Editing by Jason Neely, Kirsten Donovan and David Gregorio)