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* Democratic-led Senate suspends negotiations until HouseRepublicans have plan
* House Republicans struggle to find common ground on fiscalimpasse
* Iran says world powers have "good" reaction to its plan
By Anna Louie Sussman
NEW YORK, Oct 15 (Reuters) - Oil prices tumbled ahead of thesettlement as a U.S. senator announced the Senate would suspendfiscal negotiations until House Republicans had a plan for howto proceed on the U.S. debt limit.
Prices fell on both sides of the Atlantic throughoutTuesday's session as the hope for a deal to end the U.S. debtcrisis steadily diminished and Iran unveiled a proposal toachieve a breakthrough in a decade-old standoff over its nuclearprogram.
Brent crude dropped by nearly 40 cents on news thatthe U.S. Senate would suspend its talks until the House couldcome up with a plan. Brent crude futures settled down $1.14, at$109.90 a barrel in its third straight losing session.
U.S. oil also fell by nearly 40 cents on the news,and traded down $1.30 at $101.11 a barrel at 2:49 p.m. in thepost-settlement period.
Republicans in the U.S. House of Representatives struggledto find a strategy on Tuesday to end a fiscal impasse,complicating prospects for a deal with President Barack Obama toreopen the government and raise the country's borrowingauthority.
House Speaker John Boehner said they had not reached anydecisions on how to proceed, but were determined not to allow adefault. Leaders from the U.S. Senate also stressed they wereworking to reach a deal before a Thursday deadline.
House Republican leaders proposed a plan to reopen thegovernment and avoid debt default but it was rejected in ameeting with rank and file lawmakers. The plan differed in a fewimportant details from one in the U.S. Senate.
"The market seemed to move forcefully on the Senatesuspension," said John Kilduff, partner at Again Capital LLC inNew York.
"Oil markets are going to take this hard if we can't get adeal done."
NUCLEAR TALKS BEGIN IN GENEVA
Iranian Deputy Foreign Minister Abbas Araqchi described anegotiation meeting on Tuesday in Geneva as "good" and said hethought the proposal "has the capacity to make a breakthrough."
However, The White House warned on Tuesday against expectingquick results from international talks in Geneva on Iran'snuclear program, saying the discussions are complex andtechnical and that economic pressures against Teheran wouldremain in place.
U.S. stocks hit session lows in afternoon trading on Tuesdayas Senate fiscal negotiations were suspended until HouseRepublicans work out a plan to proceed on raising the U.S. debtlimit, funding for the government.
The talks that started on Tuesday on Iran's nucleardevelopment are the first since the election of President HassanRouhani, who has tried to improve ties with the West to pave theway for an end to sanctions that have cut Iranian oil exports bymore than 1 million barrels per day.
On Monday, the United States held out the prospect of quickrelief from sanctions for Iran if Tehran moved swiftly to allayconcerns about its nuclear program.
While oil prices could fall around $10 per barrel ifsanctions were removed and Iran resumes full exports, analystscautioned that it might still take months, if not years, beforefree-flowing Iranian oil would be back on the world market.
"If you're selling the market based on Iran, it seems to bea little premature because it's a long way to go beforesanctions are lifted and barrels come back onto the market,"said Andy Lebow, vice president at Jefferies Bache in New York.
GRANGEMOUTH, U.S. OIL STOCKS
Britain's Grangemouth refinery began halting work on Mondayahead of a 48-hour strike. In 2008, a strike there interruptedflows of crude through the Forties Pipeline System and shut inproduction at 70 North Sea fields, pushing up Brent prices.
BP, which relies on Grangemouth for steam and powerfor its Kinneil oil processing terminal, said Tuesday itunderstands there is an intent to keep the Forties oil pipelineoperating should the strike proceed, and has advised oil buyersthat crude will keep flowing. .
"The Grangemouth refinery shutdown is going to end up beingsomewhat supportive for the market, so it's a sort of push-pullwe're seeing," said Kilduff.
Investors will do without oil inventory data from the U.S.government this week for the first time since 1979, as theEnergy Information Administration refrains from publishing itsweekly report due to a lack of funds.
U.S. commercial crude oil inventories were forecast to haveincreased by 2.3 million barrels in the week to Oct. 11, aReuters poll of analysts showed on Monday.
The American Petroleum Institute, an industry group, willrelease its weekly inventory report on Wednesday.
