Brent crude edged down towards $107 a barrel as a stalemate over fiscal talks in the United States and political uncertainty in Italy rattled investors, even as geopolitical tensions in the Middle East supported prices.
Investors shied away from riskier assets as U.S. politicians squabbled over ways to reduce debt, while Italian Prime Minister Mario Monti's decision to resign early raised fears that the country could stray from economic reforms needed to steer itself out of the financial crisis.
Tensions in the Middle East that threaten to disrupt oil supply have supported prices throughout the year. The region is facing fresh unrest in Egypt, fighting in Syria and global pressure on Iran to stop its nuclear programme.
Brent crude edged down 3 cents to $107.30 a barrel. U.S. crude was at $85.63, up 7 cents.
OPEC members collectively are producing about 1 million barrels a day of crude more than needed, swelling oil stocks at a time of weak demand, Iranian OPEC governor Mohammad Ali Khatibi said.