LONDON: Oil prices fell 2% on Thursday as talks to resurrect a nuclear deal with Iran entered their final stages, but losses were limited by heightened tensions between top energy exporter Russia and the West over Ukraine.
Brent crude traded down $1.98, or 2.1%, at $92.83 a barrel at 1413 GMT. US West Texas Intermediate (WTI) crude was down $1.99, or 2.1%, at $91.67.
"(The) oil market is locked in a tug of war between Iranian sanctions relief and Russian-Ukraine tensions," said Stephen Brennock at brokerage PVM Oil.
The United States is in "the midst of the very final stages" of indirect talks with Iran, aimed at salvaging a 2015 deal limiting Tehran's nuclear activities, State Department spokesperson Ned Price said on Wednesday.
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A decision on salvaging the nuclear deal was said by France on Wednesday to be only days away and that it was up to Tehran to make the political choice, though Iran called on Western powers to be "realistic."
With a new deal possibly on the horizon, South Korea said on Wednesday it had held talks on resuming imports of Iranian crude oil and unfreezing Iranian funds. South Korea was previously one of Tehran's leading oil buyers in Asia.
However, continuing tensions over a possible Russian invasion of Ukraine continues to support oil markets because of the potential disruption to energy supplies.
Russian-backed rebels and Ukrainian forces traded accusations on Thursday that each had fired across the ceasefire line in eastern Ukraine, raising alarm at a time when Western countries have warned of a possible Russian invasion any day.
Moscow's announcement of a partial pullback of troops from near Ukraine this week was countered by Western governments warning that Russia was building up military presence near the Ukraine border.
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