World oil prices fell slightly on Tuesday, as major crude producer Iran signalled that progress had been made in trying to end its standoff with Britain over Tehran's capture of 15 British sailors.
Prices nevertheless held above 68 dollars a barrel in London, where on Monday they hit 69.58 dollars -- the highest level since September 1, 2006.
In London early on Tuesday, the price of Brent North Sea crude for May eased 36 cents to 68.38 dollars in electronic trading.
New York's main oil futures contract, light sweet crude for delivery in May, dropped 78 cents to 65.16 dollars in electronic deals before the official open of the US market.
"It seems as if a lot of the tensions between the UK and Iran have dissipated ... seems we're moving towards a resolution of this problem, which may mean the market has further to fall," Base Commodities broker Christopher Bellew said.
Crude futures had soared over the past week on concerns that Iran, the world's fourth biggest producer of oil, could move to disrupt its energy exports should the crisis with Britain escalate.
The detention of the 14 men and one woman has further poisoned relations between Iran and the West at time of mounting international impatience with the Islamic republic over its refusal to rein in its contested nuclear programme.
Iran and Britain on Tuesday started talks described as a first step towards resolving the row over the capture. Iran's top security official Ali Larijani said the new contacts could create the conditions for ending the standoff as both sides toned down rhetoric previously marked by anger and mutual accusations.
"The British government has started diplomatic discussions with the foreign ministry to resolve the issue of the British military personnel," Larijani told state television's central news agency.
"It is at the beginning of the path. If they continue on this path then logically conditions can change and we can go towards ending this issue," he added.
Iran insists that the 15 marines and sailors were captured on March 23 because they had illegally entered Iranian waters. Britain claims they were taken while in Iraqi waters.
"There is some profit-taking in the oil market, reflecting ... thinking that there won't be any real disruption to crude oil supply and that the (British detention) situation will be resolved," Victor Shum, senior principal at Purvin and Gertz, said Tuesday.
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