(Bloomberg) -- Crude oil may decline as concern eases that shipments will be disrupted from Iran and Iraq, holders of the world's second- and third-biggest oil reserves.

Twenty-four of 43 analysts, traders and brokers, or 56 percent, said prices will drop next week. Nine projected a gain and 10 said oil will be little changed. It was the most bearish response in more than seven months in the Bloomberg News survey.

Iran is considering a U.S.-backed plan to end a dispute over the Middle Eastern nation's nuclear research, a standoff that has bolstered oil prices in the past year. In Iraq, Abu Musab al-Zarqawi, who led al-Qaeda in the country, was killed June 7, raising the specter of fewer attacks on oil pipelines and refineries.

"I don't think oil belongs above $70 any longer," said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. "Prices have been inflated by petro-political threats. This week we've seen two of these threats reduced, a rare event."

Crude oil for July delivery fell $1.98, or 2.7 percent, to $70.35 a barrel in the first four days of trading this week on the New York Mercantile Exchange. Futures touched $75.35 on April 21 and April 24, the highest since trading began in 1983.

Oil was at $70.48, up 13 cents, at 9:53 a.m. Singapore time.

The United Nations Security Council's five permanent members and Germany are offering Iran technology and trade incentives to end the dispute.

Iranian Response

Iranian President Mahmoud Ahmadinejad yesterday said his nation is prepared to enter talks with the U.S. and its allies on nuclear power, the Associated Press reported. Oil has risen 15 percent this year amid concern exports from Iran, the fourth- largest oil producer, may be cut because of a standoff over the country's nuclear program.

"While far from a final resolution, tensions between Iran and the United States appear to have cooled slightly, easing market concerns of a disruption to Iranian oil supply," said Gerard Burg, energy and minerals economist at National Australia Bank Ltd. in Melbourne.

The bombing raid in Iraq that killed al-Zarqawi was a "severe blow to al-Qaeda," U.S. President George W. Bush said yesterday. "It's a victory in the global war on terror, and it is an opportunity for Iraq's new government to turn the tide of this struggle."

The recovery of Iraqi production has been stymied by attacks on oil facilities. Iraq's output fell 115,000 barrels a day to an average 1.94 million barrels a day last month, according to data compiled by Bloomberg News. The nation produced 2.48 million barrels a day in February 2003, before the U.S.-led invasion that ousted former dictator Saddam Hussein.

Economic Concern

Prices also may fall on signs higher interest rates will stifle economic growth. The European Central Bank yesterday increased its benchmark rate by a quarter point for the third time in six months. India, South Africa and South Korea also raised rates. The U.S. Federal Reserve Bank signaled this week inflation must be restrained in the world's largest economy.

"Oil prices will decline because of rising concern over inflation," said Kazuhiro Saito, chief analyst at commodity brokerage Interes Capital Management Co. in Tokyo. "Prices could touch $65 a barrel."

Bearish respondents also focused on higher U.S. inventories. Gasoline stockpiles rose 1.1 million barrels to 210.3 million barrels last week, an Energy Department report showed on June 7. Crude-oil supplies climbed 1.1 million barrels to 346.6 million. Stockpiles of distillate fuel, a category that includes heating oil and diesel, increased 1.76 million barrels to 120.7 million.

Too Early?

Analysts calling for rising or unchanged prices said that it's too early to say that the tensions between the U.S. and Iran will ease. They also said that the threat from militants to oil facilities in Iraq and Nigeria has yet to abate. U.S. oil output in the Gulf of Mexico hasn't fully recovered because of hurricane damage last year.

"The death of al-Zarqawi could go both ways," said Frank Verrastro, director of the Center for Strategic and International Studies energy program in Washington. "There could be some kind of response by his supporters, which wouldn't be good. On the other hand there could be a reduction in attacks. It's just too early to know."

The Atlantic hurricane season that lasts between June and November will have as many as six major hurricanes this year, U.S. forecasters said last month. An average season has 11 storms. Six can become hurricanes and two of them can become major storms, according to agency data.

Attacks in Nigeria, Africa's biggest producer, have shut as much as 631,000 barrels a day of oil production, more than a quarter of the country's output. Yesterday, Nigerian militants released five South Korean oil workers they took hostage.

The survey has correctly predicted the direction of prices 50 percent of the time since it was introduced in April 2004.