(Investing) – Oil prices turned lower on Tuesday, as a lack of progress in U.S.-Iran diplomacy kept concerns over Middle East supply disruptions in focus despite a recovery in crude exports from the region.As of 09:21 ET (13:21 GMT), benchmark Brent crude futures had fallen by 2.0% to $103.14 per barrel, while U.S. West Texas Intermediate (WTI) crude futures had dropped 2.3% to $90.44 per barrel.“Oil prices were little changed in early trade this morning, but then began to drift lower as the session progressed. Traders are keeping their ears open to any indication that the U.S. and Iran are making progress as they separately talk to mediators in an effort to bring about an end to hostilities,” said David Morrison, Senior Market Analyst at Trade Nation, in a note.Brent futures had climbed near $109 per barrel in the previous session before settling at around $105 a barrel. Elevated oil prices have been one factor behind a recent bond-market selloff, as worries abound that an energy shock will drive up inflation and persuade central banks to roll out a round of new interest rate hikes.Qatari mediators were expected to hold separate talks with Iran’s foreign minister and U.S. officials, with discussions focused on an amended seven-day proposal put forward by Iran last week, Reuters reported on Monday, citing sources. However, both sides remained pessimistic about reaching an agreement before the U.S. midterm elections, the report said.Despite the diplomatic uncertainty, there has been some evidence that physical oil flows out of the Middle East are recovering.Crude exports from key regional producers rose to 12.8 million barrels per day in September, their highest level since February, according to preliminary Kpler data.Saudi Arabia and the United Arab Emirates accounted for much of the increase. Saudi crude exports through the Strait of Hormuz were on track to rise sharply this month after Riyadh diverted shipments from the Red Sea port of Yanbu following damage to its east-west pipeline.Saudi Arabia has now repaired the pipeline and resumed exports from Yanbu, restoring a key route that bypasses Hormuz. The pipeline can transport up to 7 million barrels per day, while about 3.5 million bpd was flowing through it after the restart, the Wall Street Journal reported.Higher exports have not fully eased the market’s concerns because transporting crude around the Gulf remains costly and difficult.The disruption has also tightened refined-product markets. Record diesel prices have prompted the White House to consider regulatory changes that could broaden sales of red-dyed diesel, Reuters reported, while speculation over possible U.S. diesel export restrictions has widened the Brent-WTI spread.(Scott Kanowsky contributed reporting)