Oil futures are trading around their pre-conflict levels as flows continue through the Strait of Hormuz and the U.S.-Iran negotiation process continues. "The market seems to be clinging tightly to the hypothesis that the war in the Middle East cannot last long, and the optimistic statements from yesterday's negotiations reinforced this narrative," Samer Hasn of XS.com says in a note. But the picture is more complex and can shift suddenly, he adds. Without progress over Iran's nuclear program and an agreement about Iran's proxies like Hezbollah in Lebanon, "the risks of escalation remain high, and we could return to war again, throwing away all the diplomatic efforts that currently bring hope to the market." WTI is down 1.3% at $67.68 a barrel and Brent is off 1.2% at $70.72.(anthony.harrup@wsj.com)