Oil recoiled today, hit by profit-taking and the stronger dollar on the eve of an informal meeting in Brussels where the euro zone's crippling sovereign debt crisis will top of the agenda.
In London afternoon deals, Brent North Sea crude for delivery in July slid 50 cents to $108.31 a barrel.
New York's main contract, West Texas Intermediate (WTI) crude for June dropped 52 cents to $92.05 a barrel.
Financial markets were also under pressure after Fitch slashed Japan's credit rating by two notches today, citing its "leisurely" efforts at shrinking a massive public debt.
The market had surged on Monday, rebounding from last week's multi-month lows on speculative buying and as concerns resurfaced over Iran.
The strong greenback makes dollar-priced crude more expensive for buyers using weaker currencies. That tends to sap demand and pull oil prices lower.
Analysts warned that investor sentiment was also fragile ahead of Wednesday's talks between key crude producer Iran and Western countries over Tehran's nuclear ambitions.
Traders were buying crude ahead of Iran's meeting with diplomats of the so-called P5+1 in Baghdad where sanctions against Tehran will likely be discussed, according to analysts.
The P5+1 group comprises the five permanent UN Security Council members Britain, China, France, Russia and the United States, plus Germany.
The meeting is the second between Iran and the group, with the first held on April 14 in Istanbul after a 15-month impasse.
Iran faces a raft of sanctions from the United Nations, the United States and the European Union over suspicions that its nuclear programme masks a push to develop atomic weapons.
However, Tehran insists that the programme is for peaceful uses, and has pressed Western nations to lift the sanctions.
Several major customers of Iranian crude including India, Japan and Turkey have said they would reduce imports on Iranian oil, while a European Union crude embargo on Tehran is due to be fully implemented from July 1.
