Adds developments on Russia-Ukraine talks, updates prices, market activity

By Stephanie Kelly

LONDON, Feb 18 (Reuters) - Oil prices gained over 1% on Wednesday after falling in the previous session as investors assessed developments in Russia-Ukraine and U.S.–Iran talks.

Brent crude oil futures LCOc1 rose 78 cents or 1.2% to $68.20 a barrel by 1052 GMT, while U.S. West Texas Intermediate (WTI) crude CLc1 was up 73 cents or 1.2% at $63.06.

Keeping a risk premium on prices was the abrupt end of peace talks between Ukraine and Russia in Geneva on Wednesday after only two hours. Ukrainian President Volodymyr Zelenskiy said that the discussions had been difficult and accused Russia of deliberately seeking to delay progress toward a deal to end the four-year-old war.

Russia's chief negotiator Vladimir Medinsky said the talks had been difficult but business-like, and that a new round of talks would be held soon.

The U.S.-mediated peace talks in Switzerland have been taking place as U.S. President Donald Trump has twice in recent days suggested it was up to Ukraine and Zelenskiy to take steps to ensure the talks were successful.

On Tuesday, oil prices fell after Iran and the U.S. reached an understanding on "guiding principles" in talks aimed at resolving their longstanding nuclear dispute, though that does not mean a deal is imminent, Iranian Foreign Minister Abbas Araqchi said.

Just as talks began on Tuesday, Iranian state media said Iran was temporarily shutting parts of the Strait of Hormuz, a vital global oil supply route, due to "security precautions" while its elite Revolutionary Guards conducted military drills there. Later, state media said the strait had been shut down for a few hours, without making it clear if it had fully reopened.

"Iran knows Trump's negotiation tactics now. It also knows that a disruption in oil exports out of the Strait of Hormuz and a rally in the oil price to $150 per barrel is the very last thing Trump wants," said SEB chief commodities analyst Bjarne Schieldrop in a note. "Iran has time to negotiate in calmness."

Iran and Russia will conduct navy drills in the Sea of Oman and the northern Indian Ocean on Thursday, the Iranian semi-official Fars news agency reported, a few days after Revolutionary Guards conducted military drills in the Strait of Hormuz.

Political consultancy Eurasia Group said in a Tuesday note to clients that it thinks there is a 65% probability of U.S. military strikes against Iran by the end of April.

Investors will watch for weekly reports by the American Petroleum Institute, due later in the day, and the Energy Information Administration, the statistical arm of the U.S. Department of Energy, on Thursday. Analysts polled by Reuters estimated that U.S. crude oil stockpiles likely rose last week, while distillate and gasoline inventories probably fell.