Oil prices steadied at $61.52 per barrel as markets weighed in risk premiums after Saudi Arabia's Crown Prince defused regional tensions by ruling out a conflict with Iran.
Brent was trading at $61.16 per barrel at 2.44pm UAE time, slightly down from its close of $61.91 on Thursday.
West Texas Intermediate, the benchmark largely tracking North American crude grades, was also lower, trading at $55.69 per barrel.
On Sunday, Saudi Crown Prince Mohammed bin Salman said he preferred non-military options to engage with Iran, saying it would lead to the "total collapse of the global economy".
"If the world does not take a strong and firm action to deter Iran, we will see further escalations that will threaten world interests," he told CBS news channel on Sunday.
“Oil prices will jump to unimaginably high numbers that we haven’t seen in our lifetimes,” he added.
"A political and peaceful solution" stressed the prince, was "better than the military one".
His comments come after the biggest oil supply outage in Saudi Arabia's history when attacks on Saudi Aramco's processing facility - the world's largest - as well as an oilfield in the Eastern Province cut the kingdom's output in half. Saudi Energy Minister Prince Abdulaziz bin Salman said three days later that full production is expected to be restored by the end of September.
The loss of supply was equivalent to 5 per cent of global output. The US blamed Iran, which has denied any role in the attacks.
Oil prices, which registered the highest intra-day climb in more than two decades after the Saudi attacks, have begun to factor in demand fundamentals.
"Market focus appears to have well and truly returned to demand weakness, and the IEA’s [International Energy Agency] statement on Friday that their global demand growth estimates may need to be adjusted lower again has only added to the bearish sentiment," consultancy company JBC said in a note.
The IEA has consistently revised down its estimations for demand growth, with their figure for the year standing at 1.1 million bpd. JBC's own estimates are in the range of 800,000 bpd.
The IEA has warned markets it could revise its forecasts lower if the global economy continues to slow down.
"If the global economy weakens, for which there are already some signs, we may lower oil demand expectations," Fatih Birol, the IEA executive director, said last week.
