Oil up over $1 on Iran talks

By Fayen Wong

PERTH (Reuters) - Oil rose towards $130 a barrel on Monday after its biggest one-week slide on record as inconclusive talks between Iran and world powers over Tehran's disputed nuclear programme dimmed prospects of ending the row.

Prices were also lifted by worries about Tropical Storm Dolly, the first storm of the 2008 Atlantic hurricane season that could disrupt oil production in the Gulf of Mexico.

U.S. light crude for August delivery was up 62 cents at $129.50 by 0302 GMT, after rising as much as $1.25 earlier.

Last week crude slumped over $16, the biggest decline in dollar terms since futures began trading in New York in 1983 and in percentage terms the steepest sell-off since late 2004.

London Brent crude rose 66 cents to $130.85.

"The outcome of the Geneva meeting with Iran was quite a disappointment and was the main factor in the lift in oil prices this morning," said David Moore, a commodities analyst at the Commonwealth Bank of Australia in Sydney.

"The markets had become quite hopeful on Friday that there would be some sort of a resolution, but the meeting over the weekend didn't result in any guarantees from Iran and that raises the possibility of additional tensions."

Major powers on Saturday gave Iran two weeks to answer calls to rein in its nuclear programme or face tougher sanctions after talks ended in stalemate despite unprecedented U.S. participation.