Oil gains as US urges vessels to avoid Iran near Strait of Hormuz

About a fifth of the oil consumed globally passes through the Strait of Hormuz between Oman and Iran. "The Iranian risk premium cannot be fully defused as long as US warships are located where they are," said SEB analyst Bjarne Schieldrop.

Oil prices had dropped earlier in the session, extending last week's losses, after the US and Iran pledged to continue indirect talks following what both sides described as positive discussions.

Still, on Saturday Iran's foreign minister said the country will strike US bases in the Middle East if attacked by US forces, which have built up their naval presence in the region over recent weeks.

"Extremely difficult to judge how it is evolving," UBS oil analyst Giovanni Staunovo said. "Watching day by day, now looking for a date to be set for round two of the talks", he said.