Brent crude fell, extending last week's drop, after the first international talks in 15 months on Iran's nuclear program yielded an agreement to reconvene in May, Bloomberg reported.
Futures slipped as much as 1.3 percent in London.
The United Nations' five permanent Security Council members plus Germany will meet Iranian delegates in Baghdad on May 23 after "constructive" talks in Istanbul on April 14, the European Union's foreign policy chief said yesterday.
Oil rose this year amid concern that tension with Iran may disrupt global supply.
Brent oil for June settlement dropped as much as $1.62 to $119.59 a barrel on the ICE Futures Europe exchange and was at $120.06 as of 11:13 a.m. local time. Futures fell in four of the past five weeks.
Crude for May delivery slipped 20 cents to $102.63 a barrel in electronic trading on the New York Mercantile Exchange. The European benchmark contract's front-month premium to New York- traded West Texas Intermediate was at $17.11, compared with $19 on April 13.
The discussions in Istanbul lasted 10 hours and were described as constructive by the Iran's lead negotiator, Saeed Jalili, and the EU's foreign policy chief, Catherine Ashton.
The Islamic Republic dropped upfront demands, and the discussions focused almost exclusively on the nation's nuclear program, according to two Western diplomats involved.
Israel's Prime Minister Benjamin Netanyahu criticized the outcome as giving Iran more time to continue enriching uranium, the process capable of producing fuel for a nuclear bomb. Iran says it's developing atomic technology for civilian use, including energy and medicine.
Oil also dropped as Spanish bond yields climbed to a four- month high before a debt auction tomorrow. The yield on the Spanish 10-year bond jumped as much as 18 basis points to 6.16 percent, the highest since Dec. 1.
Edited by: S. Isayev