LONDON: Oil prices slid on Tuesday after Saudi Arabia, the world's biggest crude exporter, repeated its pledge to make up for lost Iranian output, easing supply concerns according to analysts.
Brent North Sea crude for delivery in May retreated $1.63 to $124.08 a barrel in late London trade.
New York's main contract, West Texas Intermediate crude for April, shed $1.88 to $106.21 a barrel.
"Today, crude oil prices have been under pressure amid reports that Saudi Arabia has resumed the mantle of swing producer and would seek to restore 'fair' prices by making up the Iranian short-fall," said Sucden Financial Research analyst Jack Pollard.
IMF chief Christine Lagarde on Tuesday warned that crude oil prices may spike by up to 30 percent if Iranian supplies were disrupted, causing "serious consequences" for the global economy.
"Clearly it would be a shock to economies if there was a major shortage of exports of oil out of Iran, it would certainly drive up prices for a period of time," Lagarde told reporters in New Delhi, wrapping up a two-day visit.
The International Monetary Fund has calculated that an interruption in oil supplies from Iran could increase oil prices by 20 to 30 percent, said Lagarde, who arrived in India at the weekend from neighbouring China.
"A sudden and brutal rise in the price of oil" from Brent crude's current levels of $125 a barrel "would have serious consequences on the global economy" until other oil-exporting nations were able to bridge the gap, she added.
Lagarde's comments came a day after the Saudi cabinet released a statement vowing to "ensure adequate oil supply, stabilise (the) oil market and bring down oil prices to reasonable levels to both producers, consumers, and the petroleum industry," according to Arab News, a Saudi-based newspaper.
Saudi oil minister Ali al-Naimi had already said last week that the kingdom stood ready to cover any shortfalls of supplies in the market.
The assurances from Saudi Arabia come as the international community ramps up sanctions on Iran -- the world's fourth largest oil producer -- in an effort to make it halt its nuclear activities, which they fear include research on developing atomic weapons.
The International Energy Agency has previously said that it expects exports from Iran to fall by about 800,000 barrels per day to one million barrels in the second half of this year.
Energy-hungry nations in Asia have voiced concerns over the availability of alternative sources to replace Iranian imports cut off by sanctions.
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