LONDON, May 31: World crude prices fell heavily on Wednesday as the United States offered to hold direct talks with Iran over the Islamic republic’s disputed nuclear programme, traders said.

Prices were lower also on the eve of the latest Opec output decision and the weekly US energy report, after spiking above $72 on Tuesday.

On Wednesday, New York’s main contract, light sweet crude for delivery in July, shed $1.48 to $70.55 per barrel in pit trading.

In London, Brent North Sea crude for July delivery sank $1.42 to $69.63 per barrel in electronic trading.

The USA in a policy shift, said it was ready to join direct talks on Iran’s nuclear programme if Tehran suspended all uranium enrichment activities.

US Secretary of State Condoleezza Rice made the offer of the first substantive talks with Iran since diplomatic relations were broken off 26 years ago as she prepared to leave for a crucial meeting of world powers in Vienna on Tehran’s suspected nuclear arms programme.

Her statement came with Washington under increasing pressure to join the negotiations led by its European allies Britain, France and Germany.

The market is concerned that Iran — the world’s fourth-biggest producer of crude — could halt exports should the UN impose sanctions over the nuclear programme which the Islamic republic insists is strictly for civilian energy production. The West, however, suspects Tehran is planning to build nuclear weapons.

Meanwhile oil prices, dampened already by expectations that the Opec would stick with the oil cartel’s current production quotas when it meets Thursday, extended losses after the offer by Washington.

Opec ministers meet in Caracas to decide production levels but delegates have indicated the 11-member oil cartel will keep its official production quota intact.

The oil cartel has an official production quota of 28 million barrels per day, its highest level in 25 years.—AFP