LONDON: Brent futures fell more than a dollar to near $107 a barrel on Monday, wiping out earlier gains, after Crimea's vote to join Russia passed without major violence, although Washington and Europe could impose punitive measures as early as Monday.
Brent crude dropped $1.06 to $107.15 by 1330 GMT. U.S. crude futures were down 41 cents at $98.48.
Brent had climbed 10 cents and U.S. crude benchmark WTI 24 cents in early trade on Monday on the risk of supply disruptions if the United States and Western countries impose sanctions on leading oil and gas producer Russia.
"The market has just been taking the instability in stride and attaching a low probability of armed conflict and of Iranian style sanctions on Russia, even after the Crimea vote," said Harry Tchilinguirian, an oil analyst at BNP Paribas.
"We're waiting for some form of European response but beyond the rhetoric, we're not going to have a kind of reaction that could jeopardize trade flows or energy flows."
China reiterated calls for calm and restraint in Ukraine on Monday, while Vice Foreign Minister Li Baodong said a political settlement was the only way to resolve the Ukraine crisis.
The potential for warmer weather in the United States and Europe is likely to ease oil demand after a long, harsh winter, traders said.
Further instability in Libya seen on Monday had traders wary of deeper cuts to oil production, which has fallen to little over 200,000 barrels per day (bpd) from 1.4 million bpd in the summer.
U.S. special forces troops boarded a tanker in the Mediterranean Sea that had fled the port of Es Sider with a cargo of oil from the port of Es Sider, halting an attempt by rebels to sell petroleum on the global market.
In a separate incident, a car bomb exploded outside a Libyan army base in the eastern city of Benghazi, where the weak central government has been battling Islamist militant groups.
The incidents underscored traders' expectations that the instability in Libya would be a protracted affair, Tchilinguirian said.
But any shortfall from Libya would be "more than made up" by exports from Iran, said Jonathan Barratt, chief executive of commodity research firm Barratt's Bulletin in Sydney.
South Korea's crude imports from Iran doubled in February from a year ago to 294,069 bpd, up 4-1/2 times from the previous month, preliminary customs data showed on Saturday. .
Investors will also be eyeing the U.S. Federal Reserve's two-day meeting which starts on Tuesday. Policymakers are likely to support the Fed's earlier decision to cut its bond-buying pace by another $10 billion a month.
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