* Oil up more than $2 after biggest one-week fall on record
* Talks between Iran and major powers inconclusive
* Tropical Storm Dolly headed for Mexico's Yucatan
(Recasts, updates prices, previous PERTH)
By Jane Merriman
LONDON, July 21 (Reuters) - Oil rose back above $130 a
barrel on Monday after its biggest one-week slide on record,
supported by inconclusive talks at the weekend between Iran and
world powers over Tehran's nuclear programme.
Tropical Storm Dolly, which is headed for Mexico's Yucatan
Peninsula, also helped boost the market as the storm is set to
pass just north of Mexico's huge Cantarell oilfield.
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Oil's losses last week were the biggest in dollar terms
since futures began trading in New York in 1983 and in
percentage terms the steepest sell-off since late 2004.
U.S. light crude for August delivery <CLc1> was up $1.79 at
$130.67 by 0921 GMT.
London Brent crude <LCOc1> rose $1.97 to $132.16.
"The outcome of the Geneva meeting with Iran was quite a
disappointment and was the main factor in the lift in oil prices
this morning," said David Moore, a commodities analyst at the
Commonwealth Bank of Australia in Sydney.
"The markets had become quite hopeful on Friday that there
would be some sort of a resolution," he said.
Major powers on Saturday gave Iran two weeks to answer calls
to rein in its nuclear programme or face tougher sanctions.
But the talks ended in stalemate despite unprecedented U.S.
participation. []
The recent war of words between Iran and the West over
Tehran's nuclear programme have contributed to tensions in the
Middle East that have helped push oil prices to a record high of
$147.27 on July 11.
Oil has doubled in price in the past year and gained around
50 percent since the start of 2008, driven upwards by
expectations of long-term supply constraints plus inflows of
cash from investors.
Prices had fallen back about $19 from the July 11 record
peak, pressured by partly concern over the fragile economy in
the United States, the world's biggest energy consumer.
Tropical Storm Dolly, the fourth storm of the 2008 Atlantic
hurricane season, is expected to emerge into the Gulf of Mexico
on Monday local time, north of the Cantarell oil field and other
ports and platforms used by the world's sixth-largest oil
producer and top supplier to the United States.
"She may dissipate, but if direction were to change then a
protective shut in of production facilities across the Gulf of
Mexico is likely," said Rob Laughlin, at broker MF Global.
(Reporting by Jane Merriman in London and Fayen Wong in
Perth)
