Crude oil slipped back towards $68 on Monday following sharp gains at the end of last week when leading exporter Saudi Arabia said it had foiled an al-Qaeda linked plot to attack oil facilities.
Brent crude, currently seen as more representative of global oil prices than U.S. oil, was down 27 cents at $68.14 a barrel by 1029 GMT. U.S. crude fell 29 cents to $66.17.
Brent rallied over one percent on Friday, lifting the week's gains to nearly $2, after Saudi Arabia said it had arrested Islamist militants, including trainee pilots preparing for suicide operations against oil facilities and military bases.
"Saudi Arabia's announcement has served as a sharp reminder to the market of the potential risks to oil supplies," said David Moore, an analyst at Commonwealth Bank of Australia. "Those risks are not likely to go away soon."
Saudi Arabia said on Saturday the arrest of 172 suspected militants did not end the al Qaeda-linked threat in the country.
Underscoring the potential for regional instability, Iran dismissed on Sunday any suggestion it might agree to partially suspend its uranium enrichment activities as a way towards ending a protracted international standoff.
Analysts said the latest statement had dented hopes of an imminent resolution that were raised last week when Iran's chief nuclear negotiator Ali Larijani said that Tehran and the European Union were nearing a united view.
Tensions between Iran, the world's fourth-largest oil supplier, and the West over Tehran's nuclear program have been in the background for more than a year.
(Reuters, 30/04/2007)