Crude-oil prices dropped below $69 a barrel Monday on rising U.S. gasoline supplies and a letter from Iran’s leader to President Bush proposing “new solutions” to escalating tensions.

The possibility of diplomacy allayed some of the market’s fear that Iran, the Organization of Petroleum Exporting Countries’ No. 2 producer, could cut supplies because of international pressure to modify its nuclear program. That fear has helped boost the price of oil to record levels in recent weeks.

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