By Anushree Mukherjee
July 31 (Reuters) - Oil prices fell more than 1% on Friday as more supplies flowed through crucial maritime chokepoints, despite a lack of major breakthroughs in talks between the United States and Iran.
Oil prices, however, remained on track for a monthly rise.
Brent futures were down $1.28, or 1.44%, at $87.75 a barrel by 0807 GMT, while U.S. West Texas Intermediate (WTI) crude slipped $1.48, or 1.77%, to $82.11 a barrel.
Brent was on track to rise 21% so far this month and WTI
18%, snapping two straight months of declines for both benchmarks.
"The market has stopped trading the war and started trading the shipping data," said Ole Hvalbye, market analyst at SEB Research.
"Every escalation since February has been followed by flows partially recovering within days, so headlines get faded and transit counts get traded more in detail I believe."
Twenty five commodities vessels passed through the Bab el-Mandeb strait on Thursday, while traffic through the Strait of Hormuz remained low with only two tankers transiting, according to Kpler shipping data.
Talks between Iran and Oman on managing the Strait of Hormuz continue, according to the Iranian Labour News Agency, despite Iran rejecting Oman's proposal for joint management of the waterway.
Saudi Arabia seeks to lead a coalition to boost defence cooperation in the Bab el-Mandeb strait, the Red Sea and the Gulf of Aden, all chokepoints for energy supplies.
GEOPOLITICAL RISKS REMAIN
Higher security risks have boosted freight costs and insurance premiums to embed a significant geopolitical risk premium in oil prices, said Priyanka Sachdeva, analyst at Phillip Nova.
A drone strike that sparked fires on two gas vessels in Egypt's Mediterranean port of Damietta has raised a new threat to shipping through the Suez Canal, one of the last major export routes available to Saudi oil amid the expanding U.S.-Iran war.
The war has disrupted traffic through both the Bab el-Mandeb strait and the Strait of Hormuz, two of the world's most important energy chokepoints.
Before the conflict, the Strait of Hormuz alone carried about a fifth of global oil and liquefied natural gas supplies, but traffic through the waterway has since fallen sharply and come to a halt for periods.
Meanwhile, Abu Dhabi National Oil Co (ADNOC) has bought five very large crude carriers (VLCCs) for about $590 million, three sources familiar with the matter said, expanding its fleet as conflicts in the Red Sea and the Strait of Hormuz tighten tanker supply.
Elsewhere, Ukraine's military said it hit Russia's Volgograd oil refinery overnight on Friday, causing a fire at the facility.
(Reporting by Anushree Mukherjee in Bengaluru, Sudarshan Varadhan; Editing by Clarence Fernandez and Susan Fenton)
