Oil prices fell below $130 a barrel Tuesday with major producers such as Royal Dutch Shell saying Tropical Storm Dolly would not likely disrupt operations in the Gulf of Mexico.

Shell said Monday it was evacuating workers from oil rigs in the western part of the Gulf as a precaution.

“The market doesn’t see Dolly as a real threat at this point,” said Victor Shum, an energy analyst with consulting firm Purvin & Gertz Inc. in Singapore. “It doesn’t look like it will have much of an impact.”

By the afternoon in Europe, light, sweet crude for August delivery was down $1.11 to $129.93 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.16 to settle at $131.04 a barrel on Monday.

The August contract expires later Tuesday at the close of the floor session in New York. The September contract, which will become the new front month, was down 70 cents at $131.10 a barrel in electronic trade.

In London, September Brent fell $1.13 to $131.48 a barrel on the ICE Futures exchange.

Possible future storms, tensions over Iran’s nuclear program and growing demand for crude in developing countries should continue to underpin oil prices, which have risen about 74 percent in the past year, Shum said.

“There’s been no slowdown in Chinese demand growth, and the Iran situation remains fluid,” Shum said. “We’ve had a correction, but I expect a resurgence in prices in the near-term.”

August Nymex crude futures have fallen 11 percent over the past week from a trading record of $147.27 hit on July 11.

Prices were also pushed down by a slight strengthening of the U.S. dollar, which bounced back against the euro after falling earlier Tuesday on news that economic growth in Germany was expected to continue despite a slowdown in the second quarter of the year.

The euro fell to $1.5875 in afternoon trading in Europe, down from $1.5893 late Monday in New York. Earlier Tuesday, the euro had risen to $1.5916.

Talks among Iran, Washington and five other world powers ended Saturday with Iran rejecting calls to freeze uranium enrichment. In response, the six gave Iran two weeks to respond to their demand, setting the stage for a new round of U.N. sanctions.

“With the weekend’s talks on Iran’s nuclear program resulting in little progress, the political risk premium that had eroded ahead of the meeting was back in play,” said analysts at JBC Energy in Vienna, Austria.

Iran’s oil minister said Tuesday that his country is opposed to any crude output increase by the cartel in its September meeting in Vienna, Austria.

Gholam Hossein Nozari told reporters on the sidelines of a petrochemical conference Tuesday that market conditions at present are in a “good situation” and should be maintained heading toward winter.

Iran is OPEC’s second largest oil producer and is estimated to be No. 2 in terms of global natural gas reserves.

Tropical Storm Dolly was expected to bring high winds and dump 10 to 20 inches of rain in coastal areas near the U.S.-Mexican border. Forecasters at the National Hurricane Center in Miami say it is likely Dolly will become a hurricane, but they do not expect it to become a major hurricane.

By morning in the U.S., Dolly’s center was located about 265 miles southeast of Brownsville, Texas. It was moving west-northwest at around 13 mph. Dolly’s winds were expected to strengthen Tuesday to hurricane force, which would mean at least 74 mph.

In other Nymex trade, heating oil futures were down 2.02 cents at $3.7277 a gallon while gasoline prices fell 3.96 cents to $3.1775 a gallon. Natural gas futures lost 34.4 cents to $10.166 per 1,000 cubic feet.

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Associated Press writer Alex Kennedy in Singapore and Christopher Sherman in McAllen, Texas, contributed to this report.