This is due mainly to concerns over supply disruption as tension rose over Iran’s disputed nuclear programme.
Brent’s rise of 13% in February following an increase of more than 3% the previous month pulled down Asian shares, base metals and gold as markets worried the rise in crude prices may hurt the global economy. Oil may also have slipped as investors booked profits following the recent surge.
Brent crude fell 7 cents to $125.40 a barrel early on Monday, after settling at its highest since 29 April. US crude declined 24 cents to $109.51, after rising for a seventh straight session and ending at the highest level since 3 May.
“Iran is the basis for the spike in oil prices,” said Ben Le Brun, a Sydney-based markets analyst at OptionsXpress. “There seems to be some profit taking going on today, but prices are set to rise further as tensions over Iran don’t look like they are going to subside anytime soon.”
Le Brun expects oil to rise about 5% to 10% from current levels because of fears of a disruption in supply from the Middle East.