UPDATE 7-Oil prices drop from two-week highs after Iranian reports on possible oil sanctions waiver
Updates with oil prices dropping after Iranian media report on possible US oil sanctions waiver
By Robert Harvey and Shadia Nasralla
LONDON, May 18 (Reuters) - Oil prices dropped on Monday after an Iranian news report saying that the United States had accepted waiving sanctions on Iranian crude oil temporarily.
Brent crude futures LCOc1 fell $1.48, or 1.4%, to $107.78 a barrel by 1310 GMT after touching $112 for their highest since May 5.
U.S. West Texas Intermediate crude CLc1 was down $1.9, or 1.8%, at $103.52 a barrel after touching its highest since April 30 at $108.70. The front-month June contract expires on Tuesday.
Both contracts gained more than 7% last week as hopes dimmed for a peace deal to end ship attacks and seizures around the Strait of Hormuz trade route.
Iran's semi-official news agency Tasnim said that it was told by a source close to the negotiation team that unlike its previous texts, the Americans had accepted in the new text to waive Iran's oil sanctions during the negotiation period.
Pakistan has shared with the U.S. a revised proposal from Iran to end the conflict in the Middle East, a Pakistani source told Reuters on Monday, though peace efforts appear to remain stalled.
Fatih Birol, head of the International Energy Agency, said on Monday that commercial oil inventories were depleting rapidly, with only a few weeks of supplies left.
Drone attacks on the UAE and Saudi Arabia and the rhetoric from the United States and Iran had raised concerns of an escalation in the conflict.
Emirati officials said they were investigating the source of the strike on the Barakah nuclear power plant, adding that the UAE had the right to respond to what it said were "terrorist attacks."
Trump is expected to meet national security advisers on Tuesday to discuss options for military action, media outlet Axios reported on Sunday, citing U.S. officials.
The Trump administration on Saturday allowed the lapse of a Russia-related sanctions waiver that had previously allowed countries including India to buy Russian seaborne oil.