Oil fell to nearly $99 a barrel on Monday in Asia as tensions in Iran offset fresh concerns that the eurozone may refuse to grant Greece a fresh bailout.
Benchmark crude for March delivery was down 49 cents at $99.07 a barrel at midday Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract fell 14 cents to finish at $99.56 on Friday.
Victor Shum, an energy analyst with Purvin & Gertz in Singapore, said crude prices were volatile after Germany's finance minister warned that the euro zone might not give Greece a fresh bailout unless it can overhaul its state and economy. Analysts fear this could reignite the region's debt crisis.
European leaders were to meet later Monday in Brussels to discuss austerity measures and a tentative deal reached Saturday between Greece and its private investors to avert a disastrous Greek default on its debt.
Shum said supply concerns also weighed on the market although Iran has postponed plans to immediately cut the flow of crude oil to Europe in retaliation for EU sanctions over its nuclear program.
Iran also threatened to close the Strait of Hormuz, a vital oil passage, and the head of its national oil company warned Sunday that EU sanctions could push oil prices up to between $120 and $150 a barrel. The market is also awaiting report from an International Atomic Energy Agency team that is currently touring Tehran, Shum said.
"Trade has been flat. The geopolitical tension in Iran and concerns over Greece's debt default are driving oil in different directions. This has helped oil to hold steady," Shum added.
In other energy trading, heating oil rose 0.5 cents to $3.063 per gallon but gasoline futures fell 2.3 cents to $2.90 per gallon. Natural gas added 6.9 cents to $2.83 per 1,000 cubic feet.