Brent crude, the global benchmark, was down 19 cents at $77.20 a barrel while USA crude slipped 2 cents to $72.92.
West Texas Intermediate crude for August delivery traded at US$74.35 a barrel on the New York Mercantile Exchange, up 21 cents, at 10:43 am in London.
"Saudi lowered some of the prices for some of its products to Asia and to Europe and to the U.S. Seems like this is sort of related to Trump tweets", said Stewart Glickman, energy equity analyst at CFRA Research in NY.
US President Donald Trump has tried to calm jittery oil markets by suggesting Saudi Arabia is willing to use up to 2 million barrels per day in spare capacity to meet any supply shortages arising from US sanctions on Iran, writes Nassir Shirkhani.
Tehran blames rising prices on US sanctions imposed on Iran and Venezuela, founding members of the cartel.
"The more that Saudi Arabia adds to the market, the less of a supply cushion we have - that's a bullish twist to a bearish development", said Yawger at Mizuho.
"People are firming up their numbers of how much Iranian oil exports will be lost, and how much Opec will increase".
Trading activity is expected to by limited on Wednesday due to the U.S. Independence Day holiday.
Meanwhile, the market continued to watch rising US crude output, with this week's oil drilling rig count data, an indicator of future production, due at 1 p.m.
Gasoline stocks fell 1.5 million barrels, compared with expectations in a Reuters poll for a 817,000-barrel drop.
"The OPEC Monopoly must remember that gas prices are up & they are doing little to help".
"Mr Trump sends every day a new message that creates uncertainty in the market", Iranian Oil Minister Bijan Zanganeh said in an interview with state television.
Saudi Arabian Oil Co will change its Asia crude pricing benchmark by replacing Platts' Oman assessment with the Dubai Mercantile Exchange's Oman futures from October 1.
Meanwhile, China's commerce ministry said on Thursday the United States is "opening fire on the entire world", warning that Washington's proposed tariffs on Chinese goods will hit worldwide supply chains.
Oil prices dropped Thursday after weekly government data showed a surprise rise in US crude stockpiles last week as refineries cut output, while gasoline stocks decreased and distillate fuel inventories rose.
"We will use a bartering system to exchange oil for goods".
China's Commerce Ministry spokesman Gao Feng said America's tariffs will backfire and damage the world economy because more than half of the US$34 billion of Chinese exports are produced by foreign companies.