Oil prices fell more than $1 on Friday, after sharp gains in the prior session, as worries of a disruption to supplies due to Saudi Arabia-led air strikes in Yemen eased.
Goldman Sachs said the strikes in Yemen would have little effect on oil supplies as the country was only a small crude exporter and tankers could avoid passing its waters to reach their ports of destination.
Brent LCOc1 was down $1 at $58.19 a barrel at 0817 GMT, after touching $57.93 earlier.U.S. crude CLc1 was down 96 cents at $50.47 a barrel, after hitting $50.25 earlier.
Oil jumped around 5 percent on Thursday, the biggest daily gain in a month, as air strikes in Yemen by Saudi Arabia and its Gulf Arab allies sparked fears that escalation of the Middle East battle could disrupt world crude supplies.
The Saudi-led coalition launched more air strikes on Friday against targets in the Houthi-controled Yemeni capital of Sanaa including close to the presidential compound.
Worries over the possible impact of the ongoing geopolitical tensions on the Bab el-Mandeb strait, the closure of which could affect 3.8 million barrels a day of crude and product flows, put oil prices on track for weekly gains.
Brent was headed for a 5 percent weekly rise - the biggest such gain since early February, while U.S crude was set for a 10 percent jump - the most since the start of 2011.
If the fighting becomes a regional conflict involving Islamic militants, then prices could climb, but a blockade of the Bab el-Mandeb strait seems unlikely, said Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance.
"Now the market is questioning how sustainable the (impact of the) geopolitical event is on oil prices," said Barratt.
In case of a closure of the strait, tankers could be diverted to travel a longer route around Africa instead of passing Yemen, analysts said.
Yemen itself is a small oil producer, with an output of around 145,000 barrels per day in 2014.
A bigger impact from the Middle East on oil prices might come from a potential nuclear deal with Iran, which could result in a loosening of western sanctions against Tehran and rising exports of its oil reserves, ANZ analysts said on Friday.
"With potentially 30 million barrels stored offshore, it could quickly flood an already saturated oil market," ANZ said.
Goldman and ANZ both noted that any nuclear deal with Iran was unlikely to lead to higher Iranian oil exports before the second half of the year.
"However Brent oil would likely lose its recent risk premium and fall back to the mid-50s," ANZ said.
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