New York's main contract, light sweet crude for delivery in April dipped 27 cents to $106.44 a barrel.
Brent North Sea crude for April shed 31 cents to $125.91 in late London deals.
Iranian oil exports were likely to fall by nearly half within six months, the International Energy Agency (IEA) said on Wednesday, while holding its estimate of global oil demand steady for the first time since late 2011.
The IEA said it expected Iranian exports to fall to about one million barrels per day (mbd) after the middle of this year.
The agency, which acts on behalf of oil-consuming nations, added in its monthly report that subdued economic activity and still relatively high oil prices would restrain upward pressure on consumption meanwhile.
It kept its forecast for growth in oil demand this year unchanged at 0.8 mbd in its first report since Greece secured a second rescue deal from public and private creditors.
In absolute terms, global demand for oil was forecast at 89.9 mbd, the report said.
"The market still remains quite bullish overall, supported by optimism about the world economy," said Justin Harper, market strategist at IG Markets Singapore.
Oil prices have climbed steadily in the past week owing to improved sentiment about the US economy, the world's largest oil-consuming nation.
Further support was added Tuesday, with data showing US retail sales grew 1.1 percent from January, the sharpest rise in five months, suggesting improvement in consumer spending.
Elsewhere, traders were closely watching the stand-off between crude producer Iran and the West over Tehran's disputed nuclear programme, which Washington fears is being used to build atomic weapons.
The Islamic republic has been hit with a raft of economic sanctions over the issue and Tehran has warned that it will blockade the strategic Strait of Hormuz -- a conduit for one-fifth of the world's oil supply -- if it faced any more. Such a move would send the price of oil soaring.
"(We) can't hide the fact that we rely on the politically-sensitive Middle East for so much of our energy needs and will continue to do so for the immediate future," said Harper.
Saudi Oil Minister Ali al-Naimi meanwhile said on Wednesday that the oil-rich kingdom stands ready to cover any shortfalls of crude supplies in the market.
"As I have noted many times before, Saudi Arabia and others remain poised to make good any shortfalls -- perceived or real -- in crude oil supplies," he told participants at the 13th International Energy Forum in Kuwait, the largest gathering of oil producing and consuming countries.
Also at the forum, Iran's oil minister Rostam Qasemi slammed the use of oil as a political tool by "big countries" against producers, warning sanctions will jeopardise supplies.
"Unfortunately, some big countries who are among the major energy consumers, view oil as one of the basic constituents in their military, security and political strategies, and use it as a political tool against oil producing countries," he said.
"Exerting unilateral economic constraints... is a threat which jeopardises free trade and the continuity of oil supply in the world," he said.
Iran denies it is trying to build a nuclear bomb and says its atomic programme is for purely civilian purposes.