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The two sides have set Tuesday as an interim deadline for an agreement in the talks at Lausanne, Switzerland.
"We're likely to stay jittery through the day on any headline coming out of Lausanne, and the stronger dollar isn't helping oil either," said analyst Phil Flynn of Price Futures Group in Chicago.
The dollar rose as the euro slumped on worries over whether Greece would secure aid before it runs out of cash in three weeks. A stronger dollar makes commodities denominated in the greenback, such as oil, more costly for holders of other currencies. [USD/]
Benchmark Brent oil was down $1.15, or about 1 percent, at $55.26 a barrel by 11:12 a.m. EDT (1512 GMT). U.S. crude was 93 cents, or nearly 2 percent, lower at $47.94.
Brent and U.S. crude tumbled 5 percent on Friday on worries of an Iran nuclear deal by March 31.
Tehran is keen to recover market share lost under the U.S.-led sanctions that have restricted its crude exports to just 1 million barrels per day from 2.5 million bpd in 2012.
Oil markets are well supplied, with recent figures showing global production outstripping demand by around 1.5 million bpd.
"Regarding Iran, there are two possible outcomes: a framework deal or an extended deadline," Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo, told the Reuters Global Oil Forum.
Societe Generale analyst Michael Wittner said if a framework agreement was reached, it was logical to expect "an immediate bearish knee-jerk reaction in the markets, with oil prices quickly losing on the order of $5."
Few investors expect the Organization of the Petroleum Exporting Countries, which pumps about a third of the world's oil, to restrain production to help push up prices, rather than maintain market share.
(Reuters)(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Dale Hudson, Susan Thomas and Lisa Von Ahn)
