Oil prices slumped Tuesday on profit-taking after spiking the day before owing to concerns over European energy supplies that had been triggered by the crisis over Ukraine.
Futures retreated as Russian President Vladimir Putin declared there was "no need" yet to send troops into Ukraine.
Brent North Sea crude for delivery in April tumbled $1.60 to stand at $109.60 a barrel in London midday deals.
The contract had soared to $112.39 on Monday, recording the highest level this year.
In Tuesday trade, West Texas Intermediate (WTI) for April shed $1.38 to $103.54 a barrel. The US benchmark had shot up to $105.22 on Monday, the highest point for more than five months.
"With risk appetite returning... we’re seeing safe haven assets such as the dollar, yen, gold and oil taking a breather," said Craig Erlam, market analyst at Alpari traders.
"Most have erased the majority of yesterday’s gains, and in some cases all of them, which in a way is evidence that traders are fairly optimistic that any further escalation (over Ukraine) will not happen."
Producing more than 10 million barrels a day in January, Russia vies with Saudi Arabia as the world's largest crude oil producer, and is the second-largest producer of natural gas.
More than 70 percent of its gas and oil exports to Europe pass through Ukraine.
"The Ukraine event is a new catalyst that propped up crude oil prices to form new highs" on Monday, Phillip Futures said in a market commentary.
Putin on Tuesday insisted that Russia had the right to use "all means" to protect its citizens in Ukraine but denied it had sent troops to Crimea, amid a Cold War-style standoff over the ex-Soviet state.
The Kremlin chief described the ouster of Kremlin-backed president Viktor Yanukovych after protests in Kiev which left nearly 100 people dead last month as an "armed seizure of power".
"We reserve the right to use all means to protect," Putin told reporters at his suburban Moscow residence in a briefing broadcast live on state television.
But he said there was currently "no need" to send troops into Ukraine, comments that appeared to reassure financial markets which have been on edge over fears of an armed conflict on the eastern edge of the European Union.