Updates prices, adds JD Vance comments in paragraph 1

By Anushree Mukherjee and Stephanie Kelly

BENGALURU/LONDON, June 22 (Reuters) - Oil prices dropped on Monday after U.S. Vice President JD Vance said progress has been made in talks with Iran and that the Strait of Hormuz was open.

High-ranking U.S. and Iranian officials wrapped up their first round of talks in Switzerland on Monday, mediators said. The discussions began on Sunday under the terms of a memorandum of understanding reached last week to extend a tenuous ceasefire from April for at least another 60 days.

Brent crude LCOc1 was down $1.46, or 1.8%, at $79.11 a barrel by 1127 GMT. Prices had climbed to $82.30 at the start of trading because of threats from U.S. President Donald Trump to restart the war on Iran, as well as an announcement from Tehran that it had again closed the Strait of Hormuz.

U.S. West Texas Intermediate crude futures CLc1 were at $76.84 a barrel, up 24 cents, ahead of the contract's expiry later on Monday. The more-active August contract CLc2 lost 57 cents, or 0.8%, to $75.28 a barrel.

Adding to price losses, Iranian Foreign Minister Abbas Araqchi said his country had secured waivers for oil and petrochemical exports, the release of some frozen assets, and the launch of a reconstruction and development plan for Iran.

Iran has resumed exports of its oil, which were blocked earlier this month due to the U.S. naval blockade, UBS analyst Giovanni Staunovo said. "The 'release' of those barrels is additional supply for the market," he added.

SUPPLY RECOVERY REMAINS CHALLENGING

More than 25 million barrels of Iranian oil have passed through the virtual blockade line since last Monday, the head of the National Iranian Oil Company told state TV on Sunday.

The United Arab Emirates, Kuwait and Iraq have offered more oil to customers in the past week.

Iraq plans to restore crude production gradually to between 4.2 million and 4.3 million barrels per day, its deputy oil minister for upstream affairs said in a statement on Sunday.

ANZ expects around 2 million to 3 million barrels per day to be restored in the first four weeks.

Recovery will remain challenging, it said, with a further 2 million to 3.5 million bpd potentially recoverable in the third quarter of 2026 subject to stability, while 1 million to 2 million bpd of supply could be permanently or semi-permanently lost.

"Early gains will be driven by logistics (shipping) rather than production," ANZ added. "Later gains will depend on upstream and refinery recovery. Full restoration is unlikely this year."

Meanwhile Israeli strikes in Lebanon killed at least 20 people on Saturday, Lebanon's state news agency NNA said, one day after a ceasefire with Hezbollah took effect.