06/17/2013 03:41 EDT | Updated 08/17/2013 05:12 EDT

Oil drops slightly after hitting US$98.74 a barrel, highest price since Sept.

NEW YORK, N.Y. - The price of oil climbed to a high for the year Monday, then fell back to post a small loss for the session as the market waits to see the results of this week's Federal Reserve policy meeting.

Benchmark West Texas Intermediate crude for July delivery fell eight cents to finish at US$97.77 a barrel on the New York Mercantile Exchange. Earlier, crude rose to $98.74, the highest level since mid-September.

Concern that the conflict in Syria could spread and disrupt oil supplies from key producing countries has boosted oil. Jim Ritterbusch, president of oil consultancy Ritterbusch and Associates, speculated that the White House's decision to arm rebels in the country has added $2 a barrel.

But Ritterbusch and others questioned how much more of a "security premium" could be packed into the price of oil.

"We still have some difficulty associating a minor escalation in the Syrian conflict with any significant supply disruptions from nearby oil producers such as Saudi Arabia and Iraq," Ritterbusch said in a daily note to clients.

Julian Jessop, head of commodities research at Capital Economics, predicted in a note to clients that the U.S. and its allies would respond to any disruption in supplies by releasing oil from strategic reserves in order to suppress any price spike.

Hopes that the U.S. Federal Reserve will maintain its aggressive stimulus measures have also lifted oil and U.S. stock markets. The central bank's policy of ultra-low interest rates has made riskier assets like stocks and oil more attractive than low-yielding bonds.

Some investors worry that long-term interest rates could spike when the Fed tightens monetary policy, threatening the economic recovery. The Fed concludes a two-day policy meeting Wednesday.

The Dow Jones industrial average and the Standard and Poor's 500 index each rose Monday.

The election of Hasan Rowhani as president of Iran helped contain some of the upside in the price of oil. Considered a moderate, Rowhani's election is being viewed as lowering the potential of further conflict in the Middle East, which supplies around a third of the world's crude.

Brent crude, a benchmark for many international oil varieties, fell 46 cents to end at US$105.47 a barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex, wholesale gasoline fell four cents to finish at US$2.86 a U.S. gallon (3.79 litres), heating oil dropped one cent to end at US$2.95 a gallon and natural gas advanced 14 cents to finish at US$3.88 per 1,000 cubic feet.