Oil falls over $1 on Iran letter to Bush

Oil fell over $1 on Monday on hopes tension over Iran's nuclear ambition will ease after Tehran made an unprecedented move to contact Washington.

U.S. light crude for June delivery was down $1.10 to $69.10 a barrel by 1330 GMT. London Brent crude fell $1.06 to $69.89 a barrel.

Iran's President Mahmoud Ahmadinejad has written to President Bush, Iranian government spokesman Gholamhossein Elham said.

"In this letter, he has given an analysis of the current world situation, of the root of existing problems and of new ways of getting out of the current vulnerable situation in the world," he said.

The letter is the first publicly announced personal communication from an Iranian Premier to a U.S. President since ties between the two countries were broken after the 1979 Islamic revolution.

"The news from Iran is certainly bearish, at least immediately anyway. But the extent of how bearish it is going to be depends on the content of the letter, which no one knows as yet," said Tetsu Emori, the chief commodities strategist at Mitsui Bussan Futures.

The price of oil has risen over $8 to date this year as investors worry the Iran dispute may eventually lead to disruption to oil output from OPEC's second largest producer.

But the oil price has fallen $5 from record highs touched two weeks ago after concerns about U.S. gasoline supplies eased last week when motor fuel inventories rose.

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