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Brent crude was down 59 cents, or 0.6%, to $96.25 a barrel at
1027 GMT, after hitting $99.50 on Tuesday, the highest since
September 2014.
U.S. West Texas Intermediate (WTI) crude futures fell 76 cents,
or 0.8%, to $91.15 a barrel, after reaching $96 on Tuesday.
Prices jumped on Tuesday on worries that Western sanctions on
Russia for sending troops into two breakaway regions in eastern
Ukraine could hit energy supplies.
Sanctions imposed by the United States, the European Union,
Britain, Australia, Canada and Japan were focused on Russian
banks and elites while Germany halted a major gas pipeline
project from Russia. But the United States made it clear that
sanctions agreed and those which may be imposed will not target
oil and gas flows.
However, analysts expect oil prices to continue seeing a level
of support from the Russia-Ukraine crisis for the time being,
with some Western countries promising to impose more sanctions
if Russia launches a full invasion of its neighbour.
"The prospect of more conflict in Ukraine should safeguard the
geopolitical risk premium," said Stephen Brennock at brokerage
PVM Oil.
"There is a risk that Russia will retaliate to the sanctions by
reducing deliveries of its own accord," Commerzbank analyst
Carsten Fritsch said.
The potential return of more Iranian crude to the market further
pressured oil prices on Wednesday, as Tehran and world powers
inch closer to reviving a nuclear agreement.
"Nuclear talks in Vienna are reaching a sensitive and important
point," Iran's foreign minister Hossein Amirabdollahian said on
Wednesday.
(Additional by Sonali Paul and Mohi Narayan in New Delhi;
Editing by Emelia Sithole-Matarise)
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