Oil tumbles on eurozone debt fears
Singapore - Crude prices sank in Asia on Monday as eurozone debt fears were compounded by disunity within the European Central Bank even as Greece announced a new round of budget cuts, analysts said.
New York's main contract, light sweet crude for delivery in October, dived $1.23 to $86.01 per barrel.
Brent North Sea crude for October delivery fell $1.02 to $111.75.
All eyes were on Europe's debt crisis yet again as Greece announced a fresh round of budget cuts in a renewed bid to stave off a debt default that traders fear would bring the region's banks to their knees.
"What's causing the fall is fear about the eurozone debt issue, fear about Greece going into default, hence pulling European banks into a collapse like the Lehman situation," said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.
"That's the fear driving the markets, it's all eurozone debt related," he said.
US banking titan Lehman Brothers was forced to declare itself bankrupt in 2008 after its risky bets on the US housing market turned bad, precipitating the global financial crisis that year which ravaged economies worldwide.
Despite Greece on Sunday announcing €2bn in new budget cuts, traders were disheartened by disharmony within the European Central Bank as it struggled to enact measures to prevent a Greek default.
Germany's main representative on the ECB executive board and the ECB's chief economist Juergen Stark on Friday announced his resignation "for personal reasons" well before the end of his term of office in May 2014.
Coming in the middle of an increasingly vocal spat between the ECB and the continent's most powerful economy, Germany, Stark's exit heightened worries that the European Union will not come together to prevent a Greek default or weakening of the eurozone itself.
German Economy Minister Philipp Roesler said in a column to be published on Monday that Europe could no longer rule out an "orderly default" for Greece.