• A cease-fire deal in Gaza could prevent Iran from attacking Israel, President Joe Biden said.
• But the president said efforts to reach a cease-fire are "getting hard."
• Oil prices jumped earlier this week on Iran-Israel tensions, but have since pulled back as softening demand in China weighs on the market.

Oil futures fell Wednesday with U.S. crude closing below $77 per barrel, after President Joe Biden said Iran might refrain from attacking Israel if a cease-fire deal is reached in Gaza.

Biden told reporters Tuesday afternoon his "expectation" is Iran would not strike Israel if a deal is clinched to stop the fighting in Gaza, though he said efforts to broker a cease-fire are "getting hard."

A new round of cease-fire talks is scheduled to begin Thursday in Qatar, though Hamas told Reuters that the militant group does not plan to take part in the negotiations.

Here are Wednesday's closing energy prices:

• West Texas Intermediate September contract: $76.98 per barrel, down $1.37, or 1.75%. Year to date, U.S. crude oil has gained 7.4%.
• Brent October contract: $79.76 per barrel, down 93 cents, or 1.15%. Year to date, the global benchmark is ahead 3.53%.
• RBOB Gasoline September contract: $2.32 per gallon, down more than 5 cents, or 2.26% Year to date, gasoline is up 10.4%.
• Natural Gas September contract: $2.22 per thousand cubic feet, up 7 cents, or 3.31%. Year to date, gas is down 11.7%.

Iran had vowed to retaliate against Israel after a Hamas leader was assassinated in Tehran two weeks ago. Israel has put its military on high alert, and the U.S. is dispatching a carrier strike group and guided-missile submarine to the region to help defend its ally.

U.S. crude oil prices jumped more than 4% on Monday on escalating tensions between Iran and Israel, but have since pulled back as softening demand in China has weighed on the market.

"There is still a prevailing view in Washington that Iran does not want a regional war, preferring a grey-zone, proxy conflict," Helima Croft, head of global commodity strategy at RBC Capital Markets, told clients in a research note Tuesday.

But the White House efforts to contain the conflict may prove difficult, with a cease-fire deal in Gaza still elusive, according to Croft. Delaying an attack by Iran beyond this week "seems precarious," she wrote.

U.S. crude inventories rose by 1.9 million barrels in the week ended Aug. 9, while gasoline stocks fell by 2.9 million barrels, according to data released by the Energy Information Administration Wednesday.

Matt Smith, lead oil analyst for the Americas at Kpler, said a modest increase in demand and lower production led to draws for gasoline and diesel. Summer driving season is nearing its end, while hurricane activity will likely ramp up this month before peaking in early September, Smith said.