Oil drops on US-Iran talks

TOKYO/SINGAPORE: Oil prices fell more than $1 a barrel on Thursday after the United States and Iran agreed to hold talks in Oman on Friday, easing concerns that a potential military conflict could disrupt supplies from the key Middle East producing region.
Brent crude futures fell $1.31, or 1.89%, to $68.15 per barrel at 0714 GMT. U.S. West Texas Intermediate crude fell $1.24, or 1.90%, to $63.90.
Oil prices surged about 3% on Wednesday after a media report suggested the planned talks between the United States and Iran could collapse. However, officials from both sides later said talks would go ahead on Friday, though the topics for discussion have not been settled.
'The oil price has erased part of the geopolitical risk premium on the news of US-Iran talks in Oman on Friday,' said Mukesh Sahdev, CEO of energy consultancy XAnalysts.
The two sides remain far apart on what the talks should include, according to officials. Iran is open to discussing its nuclear programme, including uranium enrichment, while the United States also wants to address Iran's ballistic missiles, its support for armed proxy groups in the Middle East and its domestic policies.
'It is likely that these talks will surface new differences and the risk premium will rise again soon,' Sahdev said.
Despite the talks, there are concerns U.S. President Donald Trump could still carry out threats to strike Iran, the fourth-largest producer in the Organization of the Petroleum Exporting Countries, potentially risking a wider confrontation in the oil-rich region.
About a fifth of the world's total oil consumption passes through the Strait of Hormuz between Oman and Iran. Saudi Arabia, the United Arab Emirates, Kuwait, Iraq and Iran export most of their crude via the strait.
Strength in the U.S. dollar and volatility in precious metals also weighed on commodities and broader risk sentiment, analysts said.
Meanwhile, data from the U.S. Energy Information Administration showed oil inventories declined last week in the United States, the world's biggest crude producer and consumer, after a winter storm disrupted supplies. _Reuters