Oil prices dipped on Friday and were set for a weekly drop as the U.S. and Iran prolonged nuclear negotiations, reducing fears of supply disruptions from potential conflicts, while OPEC+ could resume increasing output at its Sunday meeting.

Brent crude futures lost 5 cents to $70.70 a barrel by 0331 GMT. U.S. West Texas Intermediate crude fell 1 cent to $65.20, The Caspian Post reports, citing foreign media.

For the week, Brent was heading for a 1.8% decline, while WTI was set to fall around 2.2%, reversing some of the previous week's gains.

"Traders are in wait-and-see mode heading into the weekend with Iran tensions mounting on one hand, and the OPEC+ meeting on Sunday with a likely production hike on the other hand," said June Goh, a senior analyst at Sparta Commodities.

The United States and Iran held indirect talks in Geneva on Thursday over their long-running nuclear dispute to avert a conflict after U.S. President Donald Trump ordered a military build-up in the region.

During the talks, oil prices gained more than a dollar a barrel after media reports indicated the discussions had stalled over U.S. insistence on zero enrichment of uranium by Iran, as well as a demand for the delivery of all 60% enriched uranium to the United States.

However, prices eased after the Omani mediator said the two sides had made progress in their talks.

They plan to resume negotiations with technical-level discussions scheduled next week in Vienna, Omani Foreign Minister Sayyid Badr Albusaidi said in a post on X after the meetings in Geneva.

"While this initially allayed concerns of imminent U.S. military action, it leaves little time to reach a deal before President Trump’s deadline of 1-6 March," said Daniel Hynes, an analyst at ANZ.

Sparta's Goh said the tone from the talks indicated an unwillingness from both parties to concede, adding that the chance of a U.S. strike on Iran is growing but any military action would likely be limited.

To cushion the impact from a possible strike, Saudi Arabia is increasing its oil production and exports as part of a contingency plan, two sources familiar with the plan had told Reuters.

Also, the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, is likely to consider raising its oil output by 137,000 barrels per day for April at the March 1 meeting, sources said, after suspending production hikes in the first quarter.