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Oil slides on Greek default fears

Oil prices

Singapore:  Oil prices fell in Asia today tracking the sell-off in global equity markets on fears of a Greek debt default, analysts said.

US benchmark West Texas Intermediate for August delivery fell 82 cents to USD 58.81 while Brent crude for August eased 70 cents to USD 62.56 in late-morning trade.

Asian equity markets and the euro were facing sell-offs at the start of the week after cash-strapped Greece broke off deadlocked talks with creditors over the weekend, despite a June 30 due date of a massive repayment to the International Monetary Fund.

Greek Prime Minister Alexis Tsipras called a surprise July 5 referendum on the creditors’ latest bailout proposal, and yesterday shut banks until July 6 and imposed capital controls throughout the country to avoid flight of cash.

The EU and IMF responded by rejecting a request to extend Greece’s bailout beyond the June 30 deadline, meaning it will default on a key payment and possibly crash out of the eurozone.

“With the Greek government’s decision to pursue a referendum set for July 5, risk aversion has returned and is likely to persist this week,” Singapore’s United Overseas Bank said in a commentary.

Daniel Ang, investment analyst at Phillip Futures in Singapore, said the weakening euro “could see crude prices continue to drop, similar to what we have seen at market open”.

Dealers are also waiting to see if Iran and major world powers can reach a deal on curbing Tehran’s nuclear programme by the end of the month that would allow Western powers to remove sanctions, paving the way for more Iranian crude to hit the already oversupplied international market.

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