To update prices and add details

NEW YORK, Feb 17 (Reuters) - Oil prices fell nearly 2 percent on Tuesday to their lowest level in two weeks , amid hopes that tensions between the United States and Iran were easing after Iranian Foreign Minister Abbas Araqchi said Tehran and Washington had reached an understanding on key "guiding principles" during the second round of nuclear talks in Geneva.

Brent crude futures fell $1.41, or 2.1 percent, to $ 67.24 a barrel by 1650 GMT, and U.S. West Texas Intermediate crude futures slipped 65 cents, or 1 percent, to $ 62.24 a barrel in volatile trading , putting both benchmarks on track for their lowest settlement levels since February 2.

US West Texas Intermediate crude had risen by more than a dollar earlier in the session.

Araghchi said that Iran and the United States had reached an understanding on key "guiding principles" during a second round of indirect talks on their nuclear dispute held in Geneva today, adding that this did not suggest an agreement was imminent.

The talks came amid a US military buildup in the Middle East. Iran's Supreme Leader warned today that US attempts to overthrow the Islamic Republic would fail.

Sugandha Sachdeva, founder of the New Delhi-based research firm SS Wealth Street, said that volatility in oil prices is likely to continue, with sharp swings in both directions driven by diplomatic signals rather than fundamental supply and demand factors.

Investors have been closely monitoring relations between the United States and Iran, as any escalation or conflict could lead to Iran closing the Strait of Hormuz, a crucial oil export route, which would severely impact global oil exports.

Iran, along with the members of the Organization of the Petroleum Exporting Countries (OPEC) – namely Saudi Arabia, the United Arab Emirates, Kuwait and Iraq – exports most of its crude oil through the Strait of Hormuz, primarily to Asia.

Also in Geneva, Ukrainian and Russian officials are scheduled to meet for a new round of US-mediated peace talks, which the Kremlin has said will focus on territory, the main sticking point.

Any peaceful resolution could lead to the lifting of sanctions, bringing Russian oil back into the main market.