By Ahmad Ghaddar

LONDON (Reuters) -Oil prices fell sharply to a two-week low on Wednesday as the spread of the coronavirus Delta variant in top consuming countries outweighed the impact of Mideast geopolitical tensions and a fall in U.S. inventories.

Brent crude oil futures were down $1.80, or 2.5%, to $70.61 a barrel by 1349 GMT. U.S. West Texas Intermediate (WTI) crude fell $2.15, or 3.1%, to $68.41 a barrel. Both contracts were trading at their lowest since July 21.

“Worries continue to grow over the spread of the Delta variant in China, which has weighed heavily on oil prices in recent days,” analysts at bank ING said.

The United States and China, the world’s two biggest oil consumers, are grappling with rapidly spreading outbreaks of the highly contagious Delta variant that analysts anticipate will limit fuel demand at a time when it traditionally rises in both countries.

In China, the spread of the variant from the coast to inland cities has prompted authorities to impose strict measures to bring the outbreak under control.

An expected fall in U.S. oil inventories failed to arrest losses.

U.S. crude inventories fell by 879,000 barrels for the week ended July 30, according to two market sources, citing figures from industry group American Petroleum Institute (API).

Gasoline inventories fell by 5.8 million barrels and distillate stocks fell by 717,000 barrels, the data showed, according to the sources, who spoke on condition of anonymity.

Official Energy Information Administration numbers are due later on Wednesday.

Tensions in the Mideast Gulf also supported prices.

On Tuesday, three maritime security sources claimed Iranian-backed forces seized an oil product tanker off the coast of the United Arab Emirates, though Iran denied the reports.

This is the second attack on a tanker since Friday in the region, which includes the Strait of Hormuz. The United Kingdom and the United States are also blaming Iran for the earlier incident, in which drones crashed into the vessel and killed two sailors. Iran denies the reports.

(Additional reporting by Naveen Thukral in Singapore; editing by Jason Neely and Barbara Lewis)