Oil prices settled lower on Wednesday, after Oman's foreign minister said a fresh round of nuclear talks between Iran and the U.S. would take place later this week.

Any attack by Israel against Iran could significantly impact US-Iran nuclear talks, while also escalating already heated tensions in the wider Middle East region.

Oil prices slipped as traders assessed the implications of diplomatic overtures on multiple fronts –including Russia-Ukraine peace talks and US-Iran nuclear negotiations – while a cautious outlook for China’s economy further dampened sentiment.

Oil prices settled marginally higher on Monday as signs of a breakdown in U.S. talks with Iran over its nuclear program offset a Moody's downgrade of the U.S. sovereign credit rating.

A US media outlet reports that Israel may be poised to strike Iran’s nuclear sites and oil markets wince. In Washington, a Republican administration wonders if Tehran is more determined or deterred.