The price of oil fell below $107 a barrel on Monday in reaction to the agreement reached between the U.S. and Russia on getting Syria to give up its chemical weapons.
By early afternoon in Europe, the benchmark oil contract for October delivery was down $1.52 to $106.69 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 39 cents on Friday.
American and Russian chemical weapons experts met in Geneva to hammer out a plan for getting Syria to turn over its chemical weapons arsenal. Under the agreement, Syria would provide an inventory of its chemical arsenal within one week and hand over all of the components of its program by mid-2014.
The U.S. had threatened military action against the regime of President Bashar Assad after his forces allegedly attacked civilians in a rebel-held Damascus suburb with chemical weapons. But the Obama administration, failing to win widespread support for intervention in Syria, opted to work on a diplomatic solution with Russia, a key Syrian ally.
There has been no official statement from the Syrian government on the deal but Syrian Minister of National Reconciliation Ali Haidar was quoted by Russian RIA Novosti news agency as saying that the agreement was "a victory for Syria."
Syria is not a major oil producer, but oil traders say the possibility of a wider conflict could interrupt production and shipping routes in the Middle East and cause prices to rise. In recent days, oil prices have risen and receded in accordance with the perceived likelihood of a U.S. military attack.
The November Brent contract, the benchmark for international crudes, fell $2.02 to $109.68 a barrel on the ICE Futures exchange in London.
Brent prices received some support from Libya's continued complications in its oil industry, including production snags and labor conflicts at export terminals.
"The more fundamental issue of constrained Libyan exports continued unabated," said a report from JBC Energy in Vienna. "The shortages of Libyan crude continue to underpin the European market for light-sweet crude even as production levels in the North Sea recover after maintenance."
In other energy futures trading on Nymex:
— Wholesale gasoline fell 4.25 cents to $2.7144 per gallon.
— Natural gas lost 0.4 cent to $3.673 per 1,000 cubic feet.
— Heating oil retreated 3.91 cents to $3.0746 per gallon.