Oil prices tipped lower on Friday after diplomats at the United Nations in New York said efforts at revamping sanctions against Iraq might be scrapped.
Brent blend, in positive territory earlier in the day, lost ground and by close of trade in London was down 20 cents at US$28.12 a barrel.
US light crude closed US$0.54 lower at US$28.50 a barrel.
UN diplomats said that if Russia continued to block proposals for revised Iraqi sanctions then the issue was likely to be dropped by the world body.
That would probably mean a six-month renewal of the oil-for-food programme from which Iraq withdrew earlier this month in protest at the planned sanctions overhaul.
Iraq suspended its 2.1 million barrels per day of oil sales for the duration of a one-month extension of oil-for-food, awaiting a UN vote due on July 3.
But a key European diplomat said that if there were no agreement by then, the US was likely to endorse a no-changes six-month rollover of oil-for-food instead of a second one-month extension of the humanitarian programme.
Baghdad has said it will resume shipments, some five percent of world exports, if oil-for-food were renewed as normal.
Russia on Thursday cast doubt on getting agreement by July 3 on the sanctions revision, which would ease limits on civilian goods while tightening controls on military goods and smuggled oil.
Washington does not have the political will for protracted negotiations on the plan, especially as it fears that the proposed relaxation on imports could leave it open to domestic charges of being soft on Iraq, European diplomats said.
A second one-month extension of oil-for-food would only be likely if Russia gave hard assurances that its objections could be overcome in that time, diplomats said.
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