NEW YORK (AP) -- The price of oil slipped below $103 a barrel for the first time since early August, as the U.S. signaled a willingness to pursue a diplomatic path with Iran.
By early afternoon in New York Tuesday, benchmark oil for November delivery was down 92 cents to $102.67 a barrel. Oil has dropped 7 percent since closing at a two-year high of $110.53 on Sept. 6.
Some analysts said that apparent diplomatic progress over the elimination of Syria's chemical weapons and a seeming thaw in relations between Iran and Western powers were easing fears of a potential disruption in oil supplies.
President Barack Obama on Tuesday welcomed the new Iranian government's pursuit of a "more moderate course," saying it should offer the basis for a breakthrough on Iran's nuclear impasse with the United Nations and the U.S.
But Carl Larry, an analyst with Oil Outlooks and Opinions, said "too much faith" was being put in Iran, which has agreed to participate in talks about its nuclear program with the U.S. and five other countries later this week at the U.N. The talks will be the highest level contacts between the U.S. and Iran in six years.
Sanctions against Iran's oil sector have cut the Islamist Republic's exports from 2.5 million barrels in 2011 to 1.2 million.
Obama also called on the U.N. Security Council to pass a resolution that would enforce consequences on Syrian President Bashar Assad if he fails to follow a U.S.-Russian deal to turn his chemical weapon stockpiles over to the international community.
Meanwhile, investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products.
Data for the week ending Sept. 20 is expected to show declines of 1.5 barrels for both crude oil stocks and gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.
In other markets, Brent crude, the benchmark for international crudes used by many U.S. refineries, fell 30 cents to $107.86 a barrel on the ICE Futures exchange in London.
On the Nymex:
— Wholesale gasoline rose 1 cent to $2.62 per gallon.
— Natural gas lost 8 cents to $3.52 per 1,000 cubic feet.
— Heating oil retreated 1 cent to $2.94 per gallon.
Pablo Gorondi in Budapest and Pamela Sampson in Bangkok contributed to this report.