Oil prices dived below $140 a barrel this evening as the US dollar firmed and tensions over Iran eased. US crude slumped $5.64 to $139.65, while Brent North Sea crude fell $3.83 to $140.60.
A strengthening US currency makes dollar-priced crude more expensive for buyers using weaker currencies, dampening demand for oil.
The dollar rallied against other currencies after US President George W Bush, speaking over the weekend ahead of a G8 summit in Japan, said his administration backed a 'strong' dollar.
Over the weekend meanwhile, Iran offered to negotiate on its nuclear programme but without a freeze on uranium enrichment, in its first comments since responding to an international package aimed at ending the stand-off.
EU foreign policy chief Javier Solana said he hoped to meet Iran's top nuclear negotiator later this month.
