Brent crude led energy prices from petrol to heating oil lower after Iran and world powers reached an interim accord on the country's nuclear programme that will ease economic sanctions while keeping a cap on oil sales.
Futures slid as much as 2.7% in London, declining for the first time in four days, while West Texas Intermediate fell 1.6% in New York.
Iran's oil exports will be held to about 1 million barrels a day under sanctions that remain in force after the deal announced yesterday in Geneva, according to the White House.
Brent for January settlement fell as much as $3 to $108.05 a barrel on the London-based ICE Futures Europe exchange. It stood at $109.27 in later London trade.
WTI for January delivery fell as much as $1.55 to $93.29 a barrel in electronic trading on the New York Mercantile Exchange.
The six-month agreement, which offers Iran about $7 billion in relief from sanctions in exchange for curbs on its nuclear programme, leaves in place banking and financial measures that have hampered its crude exports.
Brent, the benchmark for half the world's crude, rose the most in almost two weeks on November 8 after US Secretary of State John Kerry downplayed the chances of a nuclear accord.
The deal was reached yesterday after foreign ministers from the US, Europe, China and Russia made unscheduled trips to Geneva to push the third round of talks in six weeks to a conclusion.
The economic constraints have cut Iranian oil sales by 60% since the start of 2012, depriving the country of more than $80 billion in revenue, US President Barack Obama's administration said in a statement.
Sanctions remain on sales of Iranian refined products, while Iran gains access to $4.2 billion in oil revenue frozen in foreign banks, the White House said.
As part of the accord, the European Union will lift a ban on insurance for tankers transporting Iranian oil, making it easier for the Persian Gulf nation's six remaining customers to take delivery. The EU will continue to prohibit crude imports from Iran.
