Brent crude futures fell 24 cents, or 0.26%, to $91.92 a barrel, as of 0837 GMT. U.S. West Texas Intermediate crude futures were down 36 cents, or 0.41%, at $87.72 a barrel.
Both benchmarks traded over $1 a barrel lower than their previous settlement price at their nadir in Monday’s session.
The contracts rose by more than 1% last week for a second consecutive week, on fears of potential supply disruption if the Israel-Hamas war grows into a wider conflict in the Middle East, the world’s biggest oil-supplying region.
“Escalating wrath in the region will strengthen economic headwinds, potentially rising oil prices will push global inflation higher, monetary tightening could resume, and global oil demand growth will be dented,” said PVM analyst Tamas Varga.
Israel continued its bombardment of Gaza on Monday after launching air strikes over southern Lebanon overnight.
But aid convoys started to arrive in the Gaza Strip from Egypt over the weekend, as Arab leaders and foreign ministers gathered for a summit in Cairo which was unable to yield a joint statement.
“There is some relief in the oil market that Israel is holding off on a planned ground incursion of northern Gaza to negotiate a release of hostages, which opens up a window for diplomacy,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
U.S. President Joe Biden, who visited Israel last week, had calls on Sunday with the leaders of Canada, France, Britain, Germany and Italy, after speaking with Israeli Prime Minister Benjamin Netanyahu and Pope Francis.
Leaders of France and the Netherlands will visit Israel this week.
The risk of reduced oil supply in the event of escalation in the Middle East could have been calmed by the U.S. move last week to suspend sanctions on OPEC member Venezuela, after a Venezuelan government deal with the opposition.
Meanwhile, Norway’s crude production fell to 1.64 million barrels per day (bpd) in September, down from 1.79 million bpd in August and below forecasts of 1.73 million bpd.
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