Oil dips on eurozone debt woes

2012-05-25 08:35

Singapore - Oil prices eased in Asian trade on Friday on growing fears about the eurozone's debt troubles but the falls were tempered by worries about the nuclear standoff between the West and Iran, analysts said.

New York's main contract, West Texas Intermediate crude for delivery in July was down 25 cents to $90.41 per barrel while Brent North Sea crude for July shed 27c to $106.28 in morning trade.

"Oil prices continue to decline as macroeconomic sentiment continues to weaken, with the lack of concrete measures on the part of European policymakers to address the Greek issue," Barclays Bank said in a commentary.

It said the lack of a policy response to Greece's possible exit from the euro was "weighing significantly across all risk assets".

Shortly after a European Union summit that ended Thursday failed to produce a conclusive plan on dealing with Athens, a May survey of eurozone business confidence showed the sharpest monthly fall for nearly three years.

A Greek general election set for June 17 is expected to result in a win for anti-austerity parties who have said they will tear up a bailout deal with the European Union and International Monetary Fund.

Such a move would in effect lead to the country's euro exit, which analysts warn could have disastrous knock-on effects for the global economy.

Investors are also keeping close watch on the nuclear row between Iran and the West after talks between the two sides ended on Thursday with few results except to fix a date to meet again next month.

P5+1 nations - Britain, China, France, Russia and the United States plus Germany - had laid out a new package of proposals to persuade Iran to suspend uranium enrichment, which was flatly rejected by Tehran officials.

Iran has faced a raft of sanctions from the international community over its nuclear programme, seen by many as a guise for a atomic weapons push.

Iran has insisted that the programme is for purely peaceful purposes.

"Getting Iran to the table is one thing, getting them to back down is quite another," said Justin Harper, market strategist at IG Markets Singapore.