Oil falls as dollar gains

SINGAPORE (Reuters) - Oil fell below $72 on Monday, retreating further from eight-month highs as the dollar rose, although traders kept a close watch on Iran where contested election results sparked a weekend of violent protests.

The dollar rose broadly on Monday, cutting into the commodity purchasing power of buyers using other currencies, as investors took profits on non-dollar currencies that had climbed to multi-month highs.

U.S. crude fell 44 cents to $71.60 a barrel at 0247 GMT, and London Brent crude dipped 39 cents to $70.53.

"I would say the dollar is probably the driver... but I have to say I am surprised that (the Iran situation) didn't drive the market up," said Clarence Chu, a trader at U.S.-based Hudson Capital Energy in Singapore.

Supporters of Iran's defeated presidential candidate plan a rally in Tehran on Monday to protest against the re-election of Mahmoud Ahmadinejad, which has sparked two days of violent protests in the capital.

Former Prime Minister Mirhossein Mousavi has appealed to the Islamic Republic's top legislative body to annul Friday's election result, in which hardliner Ahmadinejad took 63 percent of the vote.

"The Iranian situation would be bullish. It's another round of geopolitical risk to consider, if it leads to instability in Iran," said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo.

Iran is the world's fifth-largest oil producer and its coastline flanks the Strait of Hormuz, a choke point at the southern end of the Gulf through which around 40 percent of the world's seaborne oil trade passes. link...