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Brent futures were down 39 cents, or 0.43%, at $90.50 a barrel
at 0855 GMT. U.S. West Texas Intermediate (WTI) crude fell 26
cents, or 0.3%, to $87.43 a barrel.
Both benchmarks climbed nearly 6% on Friday, taking Brent 7.5%
higher on the week and WTI up 5.9%, as investors priced in the
possibility of a wider Middle East conflict.
The war between Islamist group Hamas and Israel poses one of the
most significant geopolitical risks to oil markets since
Russia's invasion of Ukraine last year, amid concerns about any
potential escalation involving Iran.
Iran warned on Saturday that if Israel's "war crimes and
genocide" were not stopped then the situation could spiral out
of control with "far-reaching consequences."
With fears of the conflict escalating, U.S. Secretary of State
Antony Blinken will return to Israel on Monday to talk "about
the way forward" after several days of shuttle diplomacy between
Arab states.
Israel denied on Monday that a ceasefire had been agreed in
southern Gaza, after security sources in Egypt had earlier said
a deal had been reached to pause strikes and allow foreigners to
leave and aid to enter the region.
"Investors are trying to figure out the impact of the conflict
while a large-scale ground assault has not begun after the
24-hour deadline that Israel first notified residents of the
northern half of Gaza to flee to the south," said Hiroyuki
Kikukawa, president of NS Trading, a unit of Nissan Securities.
China and Russia's foreign ministers met in Beijing on Monday,
where they discussed the Israel-Hamas conflict.
"The situation remains fluid and ugly for price prediction with
little chance of a return to a relative normal market, whatever
that might be post-COVID/Ukraine," PVM analyst John Evans said.
Otherwise, the United States last week imposed the first
sanctions on owners of tankers carrying Russian oil priced above
the G7's price cap of $60 a barrel, an effort to close loopholes
in the mechanism designed to punish Moscow for its invasion of
Ukraine.
Russia is one of the world's top crude exporters, and the
tighter U.S. scrutiny of its shipments could curtail supply.
(Reporting by Robert Harvey in London, Yuka Obayashi in Tokyo
and Emily Chow; Editing by Susan Fenton)
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