LONDON: Crude oil fell towards $109 a barrel yesterday as stock markets tumbled and the dollar strengthened after an unusual bank bailout proposal for Cyprus threatened to trigger fresh turmoil in the eurozone.
A proposal that Cyprus would tax depositors as part of its bailout plan sparked fears of a run on some banks in the region.
However, a series of recent positive numbers from the world’s top oil consumer the US and worries over supply disruption helped stem further losses in oil.
Brent futures fell $2.04 per barrel to a low of $107.78 a barrel before recovering to trade around $109.26 by 1500 GMT. US oil lost 26 cents to $93.19.
“The bailout conditions for Cyprus, specifically the unprecedented removal of funds from depositors’ accounts, is sending share and commodity prices lower,” said Tamas Varga, oil analyst at oil brokers PVM Oil Associates in London.
Cypriot ministers were trying yesterday to revise a plan to seize money from bank deposits before a parliamentary vote today that will secure the island’s financial rescue or could lead to its default, with reverberations across the eurozone. Reuters
