Brent crude knock out below 107 dollars a barrel on Monday after six nations struck a fresh six-month deal with Iran to curb its nuclear programme.
U.S. President Barack Obama at the same time urged Congress not to impose additional sanctions on the country.
Crude oil prices trended lower following gains on Friday after weaker-than-forecast U.S. non farm payrolls suggested the Federal Reserve may slow tapering its bond-buying stimulus.
Brent crude for February delivery was down 34 cents at 106.91 dollars per barrel.
The contract had settled 86 cents higher on Friday.
U.S. crude slipped 51 cents to 92.21dollars per barrel, after closing 1.06 dollars higher on Friday.
“Obama’s comments act in favour of Iran and contribute to more downside in oil markets given the potential inflow of Iranian barrels to oil markets,” said Chee Tat Tan, investment analyst at Phillip Futures in Singapore.
The highly anticipated U.S. jobs numbers on Friday showed a rise of just 74,000 in December, the smallest increase since January 2011.
This development suggested that the Fed may take it easy in tapering its bond purchases that have boosted liquidity and appetite for risky assets such as oil.
A deal between Iran and six major powers will come into force on Jan. 20, the Iranian Foreign Ministry and the European Union said on Sunday.
The deal is intended to pave the way to a solution to a long standoff over Tehran’s nuclear ambitions.
Sanctions against Iran over its nuclear programme have kept about one million barrels per day of oil off global markets.
Meanwhile, an agreement reached Nov. 24 last year raised hopes of a long-term deal that could see Iran resuming full exports.
Obama urged the Congress not to impose additional sanctions on Iran, saying that doing so risked undermining the Nov. 24 agreement.
The agreement aims to give the two sides six months to reach a comprehensive deal.
In a deal, sources said Iran and Russia are negotiating an oil-for-goods swap worth 1.5 billion dollars a month that would enable Iran to lift oil exports substantially.
This deal is said to undermine Western sanctions against the country.
Brent prices were supported by reports of fresh production problems at the North Sea’s Buzzard oil field.
Buzzard is the largest of the fields that contribute to the Forties crude blend, the most important of the North Sea crudes underpinning the Brent crude benchmark.
The recent volatility in oil prices may in part have been spurred by the annual shifting of billions of dollars in commodity index funds.
Under the changes to occur over five business days ending Tuesday at the Standard & Poor’s Goldman Sachs Commodity Index and the Dow Jones-UBS Commodity Index, allocations toward Brent will rise 2.7 dollars billion.
Meanwhile, U.S. crude will fall by almost 2.8 billion dollars.
The rebalancing of the two indexes, which have an estimated 155 billion sdollars in all tracking them and are run by S&P Dow Jones Indices, is a yearly ritual.
It is meant to add or trim allocations to commodities based on global production and liquidity data.
“It’s a tricky period for traders,” said Mark Keenan, head of commodities research at Societe Generale. “As we get through this period, things do tend to settle down a bit.”