LONDON  - Oil prices fell Tuesday on Spain’s debt and banking woes, while losses were capped by the prospect of a disruption to Middle East supplies caused by tensions over Iran, traders said.

New York’s main contract, West Texas Intermediate crude for delivery in July dropped 18 cents at $90.68 a barrel. Brent North Sea crude for July shed 60 cents to $106.51 in late London deals. Markets are increasingly worried that Spain — the eurozone’s fourth largest economy — could follow Greece, Ireland and Portugal in asking for a massive international bailout. This in turn is likely to weigh on crude demand.

Investors were also keeping close watch on the situation in Iran, after the Islamic republic and Western powers failed to reach an agreement on Tehran’s nuclear programme, which is thought to mask a nuclear weapons push.

Despite the offer of incentives by the West, Tehran has refused to suspend enrichment of uranium to 20 percent, insisting that it has the right to do so for peaceful purposes.

Iran has threatened to disrupt Middle East oil supplies if it is slapped with further sanctions by the West, while its arch-enemy Israel has not ruled out launching a pre-emptive strike on its nuclear facilities.