Does the conflict in Iran present growing economic uncertainty?
"U.S. oil fell more than $1 on Tuesday as Britain and Iran said they were willing to use diplomacy to end a row over 15 British sailors and marines seized in the Gulf on March 23.
"We're not looking for a confrontation over this and actually the most important thing is to get people back safe and sound. And if they want to resolve this in a diplomatic way the door is open," British Prime Minister Tony Blair told a radio station in Scotland.
Investors interpreted the comments as a favorable response to apparently conciliatory remarks by Iran, the world's fourth biggest oil exporter, late on Monday.
Ali Larijani, the secretary of Iran's Supreme National Security Council, told Britain's Channel 4 News Iran wanted to resolve the matter through diplomacy and without a trial.
U.S. crude was down 92 cents at $65.02 a barrel by 1256 GMT, having dipped as low as $64.73. London Brent was down 74 cents at $68.00. Brent, which is more sensitive to developments in the Middle East because of proximity, commanded a near record premium to U.S. oil at one point in March.
"Something will eventually have to give in the current crisis, and when it does, we could be in store for a rather sharp move in either direction," said Edward Meir, an analyst at Man Financial Energy Group in London."