Oil fell $1.50 to below $70 a barrel after US aircraft killed al-Qaeda's Iraq leader Abu Musab al-Zarqawi today, raising hopes for a let-up in attacks on Iraq's oil industry.
OPEC member Iran's willingness to talk with opponents of its nuclear programme to 'solve misunderstandings' was another factor pushing oil away from its $75.35 a barrel record high hit in April, dealers said.
There was also growing evidence that persistent high energy costs were feeding inflation in the US and other big importers, forcing up interest rates and hurting demand for oil.
US crude was down $1.47 at $69.35, its lowest since May 22. London Brent crude was down $1.12 at $68.07.
Chaos in Iraq and concern that the world's fourth biggest oil exporter Iran could turn off the taps in its dispute with the West have added impetus to a demand-driven rally that has taken oil to its highest level in real terms for 25 years.
