Prices jumped sharply at the end of last week as Islamic State fighters made rapid gains in parts of north Iraq, threatening Iraqi Kurdistan and coming within striking distance of some more oilfields. But US air strikes on the Sunni insurgency calmed market worries over the risk to oil output, helping pull prices lower again.
Oil exports from southern Iraq are near record levels and the Kurdistan Regional Government's
oil pipeline via Turkey is operating normally and pumping 120,000 barrels per day (bpd) of crude oil. Iraqi Kurdistan said on Friday its oil output remained unaffected.
Brent was down 17 cents at $104.85 a barrel as of 0843 GMT. The contract jumped over $1 to hit a weekly high of $106.85 on Friday before settling 42 cents lower. US crude was up 11 cents to $97.76 a barrel.
"The market is not as wor-ried now about what is happening in Iraq," said Carsten Fritsch, oil and commodities analyst at Commerzbank. "The market has become complacent about supply again. But complacency is dangerous. Given the geopolitical tensions, a spike in prices cannot and should not be ruled out."
Oil markets are well supplied in most parts of the world, and North Sea crude oil for immediate delivery is trading at a discount of $1 to $2 below the Brent futures front month.