Oil prices dipped today as the market was soothed by the potential for a diplomatic solution to a stand-off between Opec producer Iran and Britain.
US light crude for May delivery fell 22 cents to $65.72 a barrel earlier this morning, after rising 7 cents yesterday. London Brent crude lost 9 cents to $68.65, trimming yesterday's 64-cent gains, when it hit a seven-month high of $69.58.
Prices pulled back after comments from Ali Larijani, the secretary of Iran's Supreme National Security Council, that Tehran wanted to resolve a dispute over 15 British sailors held by Iran through diplomacy and without a trial.
The two countries are at odds over whether the British sailors and marines had been in Iranian or Iraqi waters when captured carrying out patrols, adding to trader worries about potential disruption to supply from the world's number-four oil exporter.
Exports from neighbouring Iraq rose in March to 1.62 million barrels per day, their highest rate since September 2006, shipping sources said yesterday.
But analysts say it would be difficult to replace the roughly 2.5 million bpd of oil exported by Iran, which borders the Strait of Hormuz, conduit for two-fifths of globally traded oil.
US refinery glitches and a drawdown in fuel stocks in the world's top oil consumer ahead of the northern hemisphere's peak summer driving season have been supporting the market.
But US and European fuel supply concerns have eased after the end of an 18-day strike by workers at French Mediterranean oil terminal Fos-Lavera on Saturday, which had threatened flows to the United States and the domestic French market.