Oil eases on hope for diplomacy in Iran stand-off

SINGAPORE, Apr 3 (Reuters) Oil prices dipped on Tuesday as the market was soothed by the potential for a diplomatic solution to a stand-off between OPEC producer Iran and Britain.

U.S. light crude for May delivery fell 22 cents to .72 a barrel by 0348 GMT, after rising 7 cents on Monday. London Brent crude lost 9 cents to .65, trimming 64-cent gains on Monday, when it hit a seven-month high of .58.

Prices pulled back after comments from Ali Larijani, the secretary of Iran's Supreme National Security Council, that Tehran wanted to resolve a dispute over 15 British sailors held by Iran through diplomacy and without a trial.

''I think there is going to be a peaceful resolution,'' said Tony Nunan, a manager at Mitsubishi Corp.'s risk management unit.

The two countries are at odds over whether the British sailors and marines had been in Iranian or Iraqi waters when captured carrying out patrols, adding to trader worries about potential disruption to supply from the world's number-four oil exporter.

Exports from neighbouring Iraq rose in March to 1.62 million barrels per day (bpd), their highest rate since September 2006, shipping sources said on Monday.

But analysts say it would be difficult to replace the roughly 2.5 million bpd of oil exported by Iran, which borders the Strait of Hormuz, conduit for two-fifths of globally traded oil.

The heightened tension over Iran has widened the spread between U.S. crude and Brent, which is more sensitive to developments in the Middle East because of its use to price around 20 million barrels of crude from Russia to Nigeria.

Analysts say this will lead to more expensive imports for U.S.

refiners U.S. refinery glitches and a drawdown in fuel stocks in the world's top oil consumer ahead of the northern hemisphere's peak summer driving season have been supporting the market.

Analysts polled by Reuters forecast weekly government inventory data to be released on Wednesday will show declines of 800,000 barrels in gasoline stocks and 600,000 barrels in distillates. Crude oil stocks were expected to have risen 1.6 million barrels for the week ending March 30, the poll showed But U.S. and European fuel supply concerns have eased after the end of an 18-day strike by workers at French Mediterranean oil terminal Fos-Lavera on Saturday, which had threatened flows to the United States and the domestic French market.

REUTERS CS DS1124