RoydadNaft –  Oil prices declined more than 1% on Thursday but remained close to multi-month highs after the United States and Iran agreed to hold talks in Oman on Friday.

According to Roydad Naft, Brent futures settled at $68.6 per barrel at 10:36 GMT, down 86 cents or 1.2%. U.S. WTI crude also traded down 82 cents, or about 1.3%, at $64.32.

However, Brent is only $3 below its five-month high reached at the end of January due to concerns over potential supply disruptions.

Oil prices remain heavily influenced by tensions in the Middle East, with markets closely monitoring the Oman talks, according to Giovanni Staunovo, an analyst at UBS.

These discussions are taking place amid the U.S. reinforcing its military presence in the Middle East, while regional players seek to avoid a military conflict that many fear could escalate into a broader war.

About one-fifth of the world’s total oil consumption passes through the Strait of Hormuz between Oman and Iran. Other OPEC members—Saudi Arabia, the United Arab Emirates, Kuwait, and Iraq—export most of their crude oil through this strait, as does Iran.

John Evans, an analyst at PVM Oil Associates, said the market is likely to fluctuate ahead of Friday’s meeting in anticipation of diplomatic progress.

“However, there will be no relief in prices, as an inappropriate statement or failure in the talks could quickly push Brent back toward the $70 per barrel level and toward the year’s highs.”

Volatility has led investors to rush to lock in oil prices for the year, with a record number of WTI Midland contracts traded in Houston in January amid concerns over Middle East supply risks and increased Venezuelan barrels entering the U.S. Gulf Coast.

The strength of the U.S. dollar and fluctuations in precious metals also put pressure on commodities and broader risk appetite on Thursday, according to analysts.