The cost of oil has eased slightly after Friday's record-breaking price surge but analysts have warned that prices could soon start to rise again.
US light, sweet crude slid 74 cents to $137.8 after Friday's unparalleled $11 jump to $139.12.
Brent fell $1.41 to 136.28, down from a record of $137.69.
Some G8 nations have called for output to increase to curb price inflation.
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'Market dysfunction'
Most Opec members are reluctant to increase production, arguing that the market is already adequately supplied with oil.
But critics argue that supplies are failing to keep pace with the growth in demand and that prices are set to head towards $200 a barrel in the next 18 months.
Stock markets across Asia fell sharply on Monday amid concerns about the impact of escalating oil prices on the region's economic prospects.
Japan's benchmark Nikkei index fell 2% while in India, where the government is under pressure over fuel subsides, the main Sensex index fell more than 4%.
"It is anybody's guess where the oil prices will go," said Gul Tekchandani, an investment adviser in Mumbai.
"Clearly nobody will venture close to the market."
Speaking at an industry conference in Malaysia, BP chief executive Tony Hayward said it was clear the oil market was not "functioning" as it should.
"Where prices are high, they show that supply is not responding adequately to rising demand," he said.
G8 pressure
Friday's 8%, or $11, rise in prices - the largest daily increase in history - was triggered by weak US employment figures and comments that a military strike on Iran's nuclear facilities was "inevitable" in the future.
Meeting in Japan over the weekend, ministers from the G8 group of industrialised nations expressed concern about price rises and called for increased investment in new technology and alternative power sources.
The US, UK, China, Japan, India and South Korea have all called on oil producers to increase output to try to control the soaring prices.
Opec has said no new decision will be made until its meeting in Vienna on 9 September.
(BBC)
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