Oil prices fell on Monday after the U.S. dropped an initial threat of sanctions against Colombia, easing immediate concerns about oil supply disruptions, although a show of force by U.S. President Donald Trump kept markets on edge.

Brent crude was down 60 cents, or 0.8%, at $77.90 a barrel by 1300 GMT. U.S. West Texas Intermediate crude was down 57 cents, or 0.8%, at $74.09.

Both benchmarks fluctuated between modest gains and losses in early trading.

The U.S. quickly dropped plans to impose sanctions and tariffs on Colombia after the South American country agreed to take in migrants deported from the United States, the White House said late Sunday.

Colombia shipped about 41% of its crude exports by sea to the U.S. last year, according to data from analytics firm Kpler.

"There's a general negative sentiment in the market. Even if sanctions don't happen, it still creates a nervousness that Trump will bully whoever needs to be bullied to get what he wants," said Bjarne Schieldrop, head of commodity strategy at SEB.

"The market is very tight fundamentally," Schieldrop said, referring to a timeframe that shows crude prices for faster delivery are rising.

Gains were capped by Trump's repeated calls on Friday for the Organization of the Petroleum Exporting Countries to cut oil prices to hurt Russia's oil-rich finances and help end the war in Ukraine.

"One way to stop it quickly is to stop OPEC from making so much money and lower oil prices ... The war will be over soon," Trump said.

Trump also threatened to hit Russia "and other participating countries" with taxes, tariffs and sanctions if a deal to end the war in Ukraine is not reached soon.

Russian President Vladimir Putin said on Friday that he and Trump should meet to discuss the Ukraine war and energy prices.

"They're preparing for negotiations," said John Driscoll of Singapore-based consultancy JTD Energy, adding that this was creating volatility in the oil market.

He added that the oil market may be slightly skewed to the downside, with Trump keen to increase US production and try to secure overseas markets for US crude.

"He wants to take some of OPEC's market share; so in that sense he's a competitor," Driscoll said.(AL)

Source: Investing.com