Oil prices fell on Monday on profit-taking after surging before the weekend on Iran supply concerns, analysts said.
New York's main contract, West Texas Intermediate (WTI) crude for delivery in April, dropped 43 cents to $106.63 a barrel.
Brent North Sea crude for May slid 83 cents to $124.98 in London midday trade.
On Friday, WTI crude had closed up $1.95 a barrel and Brent soared $3.21.
SEB bank analysts Filip Petersson told AFP on Monday that Brent prices were unlikely to drop below $120 a barrel in the short term even if economic sentiment was to worsen.
“Oil prices have good support in the tightening embargo against Iran,” he added.
Tehran has been hit by a wave of sanctions on its oil and finance sectors, as the West looks to force the country to abandon its nuclear programme.
Iran has maintained that the programme is for peaceful purposes, but the West suspects its research is for designing nuclear weapons Ä a sentiment echoed in a November report by the International Atomic Energy Agency.
“Middle Eastern tensions have pushed up prices” in recent days, said Justin Harper, market strategist for IG Markets Singapore.
A key Iranian lawmaker on Sunday declared that Tehran would not offer any concessions on its nuclear programme, amid heightening friction between the West and the Islamic republic.
“The parliament will never allow the government to go back even one step in its nuclear policy,” Aladin Borujerdi, the head of Iran's parliamentary foreign policy commission, told the official IRNA news agency.
His comments came ahead of expected talks between Iran and the P5+1 group of powers - the five permanent UN Security Council members plus Germany.
Oil prices have also been buoyed by signs of stability in the world economy, said analysts.
“Most financial markets have had a strong 2012,” said Petersson, who cautioned however that “there are many candidates for the next wave of eurozone fear.”
He added: “The strength of underlying US growth can still be questioned and the Chinese real estate sector is still in a steep dive. The 2012 rally may finally be running out of steam.
“With a very event-less week ahead people have a lot of time to consider what the most likely development going forward will be.” - Sapa-AFP