Brent crude prices fell by more than two percent on Monday following a key deal between world powers and Iran on its controversial nuclear programme.
Brent North Sea crude, the European benchmark, for January delivery fell by $2.48, or 2.23%, to $108.57, while New York's main contract, West Texas Intermediate (WTI) for January, was down 82 cents, or about 1%, at $94.02.
Iran on Sunday agreed to curb its nuclear programme for the next six months in exchange for limited sanctions relief, in a preliminary accord with world powers meant to lay the foundations for a comprehensive agreement later this year.
"Brent had rallied last week in response to market talk that the negotiations weren't going so well, and what we see right now is a downward correction of prices after the deal," Victor Shum, managing director at IHS Purvin and Gertz in Singapore, told AFP.
"The impact of the deal on global oil supply will however be limited since much of the sanctions continue to remain in place."
Tan Chee Tat, an investment analyst at Phillip Futures in Singapore, said WTI was less affected by the deal as any potential influx of Iranian oil into global markets will mainly soften Brent.
"Brent and Iran crude oil are catered to the same regional clients. As such, the news had a greater negative impact on Brent crude instead of WTI crude," he said.
The deal was reached following marathon talks in Geneva between Iran and the so-called P 5+1 nations comprising the United States, China, France, Britain, Russia and Germany.
The West and Israel suspect Iran is pursuing a nuclear weapons capability alongside its uranium enrichment programme, which Tehran insists is entirely for peaceful purposes.