Oil prices fell by more than 1 percent on Thursday, with Brent crude futures down $1.64, or 1.6 percent, at $104.42 a barrel by 0337 GMT.
US West Texas Intermediate crude was down 98 cents, or 1 percent, at $94.11, reversing gains from the previous session. Investors were weighing attacks on shipping near the Strait of Hormuz against US efforts to lower petroleum shipping costs by easing sanctions on vessels.
Maritime officials said a container ship and a dry bulk carrier sank near the strait within 24 hours after being hit by projectiles. Iran has said it is stepping up strikes in response to the US blockade of its ports. A US official said the Trump administration is considering easing sanctions on vessels that carry oil from countries including Russia, Iran and Venezuela.
For Sri Lanka, which imports its fuel, global crude prices and freight costs influence the cost of petroleum products and the pressure on foreign exchange reserves.
The US Energy Information Administration is due to publish official inventory figures on Thursday.
