Brent North Sea crude for delivery in April slid 34 cents to $111.80 per barrel in afternoon deals, having earlier spiked as high as $114.50.

New York's light sweet crude for April, known as West Texas Intermediate (WTI), eased 77 cents to $97.11 a barrel. The contract had earlier leapt as high as $99.96.

"This morning, crude oil prices initially climbed higher but quickly reversed and gave back earlier gains," said Sucden analyst Myrto Sokou.

"Brent crude oil slid lower and retreated below $112 per barrel, while the WTI crude oil contract also fell below $98 per barrel, in a correction lower.

"It is a very busy and interesting week in the economic front with major US economic indicators including the US Fed Beige Book on Wednesday and the US non-farm payroll figures on Friday that might provide a useful outlook for the US economic conditions and could give the oil markey some direction.

She added: "However, the ongoing geopolitical tensions across the Middle East and North Africa will continue to dominate the markets, causing further volatility and nervous trading conditions."

Last week, Brent oil had rocketed close to $120 on the possibility of supply problems amid more unrest in oil producer Libya.

However, Saudi Arabia stepped in to assure markets that it was ready to boost supplies.

"The unrest in the Middle East and fears that the situation will worsen are still supporting oil prices despite news that Saudi Arabia will increase output," said Ong Yi Ling, investment analyst for Phillip Futures in Singapore.

Anti-government turmoil now convulsing Libya and much of the Middle East spread to Oman, another Gulf oil exporter, over the weekend with police shooting dead two demonstrators.

Major crude producer Iran on Sunday urged OPEC, especially Saudi Arabia, to refrain from any unilateral hike in oil output, saying current crude production was enough to meet any shortages arising over the unrest in Libya.

"There is no need for OPEC members to be hasty and take unilateral decisions" to raise output, Oil Minister Masoud Mirkazemi said of Saudi Arabia, when asked to comment on Riyadh's offer to compensate for any shortage.

Mirkazemi, the current president of the Organisation of the Petroleum Exporting Countries (OPEC), said the oil cartel had so far not decided to hold any extraordinary session to discuss a raise in output.

Saudi Arabia, OPEC's largest producer of oil, pumps around 8.4 million barrels of oil per day and Iran is the cartel's second largest exporter.