LONDON (AFP) - Oil prices fell heavily on Tuesday as traders reacted to the stronger dollar, erasing earlier gains seen after energy giant Royal Dutch Shell suspended some of its crude deliveries from Nigeria. OPEC President Chakib Khelil described crude prices above 120 dollars a barrel as "abnormal," adding that they could fall to 78 dollars should the US currency strengthen and tensions ease over Iran's nuclear programme. Brent North Sea crude for September delivery fell 3.20 dollars to 122.64 dollars a barrel in electronic deals in London. New York's main contract, light sweet crude for September, slumped 2.98 dollars to 121.75. In foreign exchange market action on Tuesday, the European single currency sank to 1.5688 dollars, from 1.5741 dollars late on Monday in New York. The greenback strengthened after news that US consumer confidence showed slender gains in July but still reflected a "grim" assessment of economic conditions, the Conference Board reported Tuesday. The business research firm said its monthly index of consumer confidence edged up to 51.9 percent from a revised 51.0 in June, yet cautioned against reading too much into the gain. A strong US currency dents demand for dollar-priced goods because they become more expensive for buyers holding weaker currencies. "If the dollar continues to strengthen and the political situation (regarding Iran) improves, then the long-term prices will be about 78 dollars," Khelil told reporters in Jakarta, adding the market was well-supplied with oil. Royal Dutch Shell said Tuesday it was suspending some crude deliveries after militants sabotaged a pipeline. The news briefly sent prices above 126 dollars per barrel in earlier trade. The Anglo-Dutch giant warned it may not be able to meet some supply contracts at its major Bonny terminal before the end of September. It declared a "force majeure" " a legal clause allowing producers to miss contracted deliveries because of circumstances beyond their control " for the remainder of July, August and September It did not indicate the quantity of crude involved, but observers believe given that Bonny is one of Shell's two main terminals in Nigeria, it is likely to involve significant volumes. Oil futures had begun the week higher, rallying on Monday after militants attacked the Shell pipeline. Prices had also climbed as the market tracked developments over oil-rich Iran's disputed nuclear programme. The Islamic Republic's President Mahmoud Ahmadinejad said Monday that if the United States adopted a genuinely new approach to his country, Tehran would respond in a positive way. Ahmadinejad's comments, in an interview with US broadcaster NBC, come after he said Saturday that Iran had boosted the number of uranium-enriching centrifuges to up to 6,000, in an expansion of its nuclear drive that defies international calls for a freeze. Iran denies seeking nuclear weapons, insisting that its programme was designed to provide future energy for its growing population. Oil prices had struck record highs above 147 dollars a barrel on July 11 as the US unit weakened and owing to tensions over Iran. They have since fallen by more than 20 dollars on concerns that the global economic slowdown will weigh on energy demand, particularly in the United States " the world's biggest consumer of oil.