Oil prices fell by more than $1 a barrel on August 24 as investors took profits ahead of an expected U.S. announcement on additional sanctions against Iran, which could further disrupt oil supplies from the Middle East.
Brent crude futures fell $1.23, or 1.3%, to $93.16 a barrel by 0329 GMT, while U.S. West Texas Intermediate crude declined $1.36, or 1.6%, to $85.70, Reuters reports.
Both benchmarks recorded their second consecutive weekly gains last week, rising more than 5% as U.S.-Iran peace talks stalled. The deadlock has contributed to disruptions in oil shipments through the Strait of Hormuz, a key global energy route that previously handled about one-fifth of the world's oil supply.
Offers of Iranian crude to Chinese buyers have declined and prices have risen as a U.S. blockade has reduced Tehran's shipments, according to trade sources.
Iran has, however, allowed several Iraqi oil tankers to pass through the Strait of Hormuz following repeated requests from Baghdad, Iran's state news agency IRNA reported on Saturday.
Analysts expect the recovery in Middle Eastern oil supplies to take longer than previously anticipated if the U.S.-Iran conflict continues.
"Crude [supply] is tightening. Recent weeks have seen one of the sharpest declines in oil-on-water, whilst onshore inventories are declining as well, including in China," Morgan Stanley analysts said in a note.
By Sabina Mammadli
