US benchmark West Texas Intermediate for delivery in September finished trade at $96.41 a barrel, shedding 94 cents from Friday’s closing level.
The key European futures contract, Brent North Sea crude for October, sank by $1.93 to settle at $101.60 a barrel, its lowest level since June 2013.
“The crude complex starts this week by being clobbered lower as Libya production has increased to 540,00 bpd (barrels per day) and Kurds have recaptured control of most of the Mosul dam in Iraq,” said Matt Smith of Schneider Electric.
“Re-opening of the biggest oil ports in the east could raise Libyan oil supplies further in the next few weeks, adding to the existing oversupply on the European market,” Smith said.
Talks on Sunday between Russia and Ukraine in Berlin also “helped to dissipate geopolitical tension,” he added.
The oil market had spiked higher Friday after Kiev said that Ukrainian forces had destroyed part of a Russian military convoy that entered its territory. Investors feared direct conflict could break out between Ukraine and Russia, the world’s second-largest crude producer.
“Those reports were erroneous and peace talks are moving forward. And in Iraq (Prime Minister Nuri) al-Maliki stepping aside is taking out the fear premium that we put in on Friday,” said Phil Flynn of Price Futures Group.
Russia on Monday said that “certain progress” had been made during crisis talks Sunday in Berlin between the two countries’ foreign ministers and their counterparts from Germany and France.
Elsewhere, traders eyed easing market concerns over ongoing unrest in key OPEC crude producer Iraq.
Kurdish officials said their fighters, backed by US warplanes, have retaken the country’s largest dam from jihadists, as the United States and Britain step up their military involvement.
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