Brent crude prices steadied around the $114 a barrel mark this afternoon as fears of an imminent military strike on Syria faded.
Prices rose nearly three per cent last week as the expectation of supply problems from the Middle East if an attack occurred forced Brent upwards.
But with US President Barack Obama now set to delay air strikes until after congressional authorisation has been sought, prices dropped as low as $112.20 a barrel this morning before rallying to $114.45.
Oil prices were also boosted by increased factory activity in China, another sign the country may have averted economic showdown.
Strong orders for goods from Europe saw factory activity rise at the quickest rate in two years, according to a new survey, increasing energy demands.