It appears that the great powers may have reached an agreement over chemical weapons held by the Syrian government.
The price of Brent crude briefly moved below $109 per barrel, while US light crude neared $106 for a time, as supply concerns diminished. Over the weekend Russia and the US reached an agreement in principle that would see Damascus put its chemical arsenal under international control. As a result, the rationale for a US-led western strike appears to have disappeared, although both Washington and Paris have said that military strikes are still a possibility if the Syrian government does not comply with the agreement.
For now, then, there will be no action in the eastern Mediterranean. Thus some of those traders that bought oil in expectation that military strikes would cause disruption in global oil supply (whether as a result of Iranian action in the Persian Gulf or a potential closure of the Suez Canal) have opted to sell the commodity, driving prices down.
Meanwhile, US dollar weakness is helping to counteract some of the losses. The US currency has come under pressure today after news that Larry Summers would not be seeking the chairmanship of the Federal Reserve. This means Janet Yellen, perceived as the more dovish of the two, becomes the most likely successor to Ben Bernanke. In the view of financial markets, this means more QE for longer, so risk assets are enjoying a positive day.