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Oil tumbles in Asia as Greek vote shakes world markets

Oil prices

Singapore:  Oil fell in Asia today as investors digested the implications of Greece rejecting tough austerity demands from creditors which could send the debt- strapped nation crashing out of the eurozone, analysts said.

Greek voters overwhelmingly rejected the bailout terms demanded by international creditors, with official figures from Sunday’s referendum showing 61.31 per cent voting “No” and 38.69 per cent voting “Yes”.

“The result of the Greek referendum has thrust the world into uncharted territory,” Singapore’s DBS Bank said in a market commentary.

US benchmark West Texas Intermediate for delivery in August plummeted USD 1.88 to USD 55.05 a barrel and Brent crude tumbled 50 cents to USD 59.82 in late-morning Asian trade.

“With the No result announced in early Asian trade, we are seeing big mark downs as markets open,” said Nicholas Teo, market analyst at CMC Markets in Singapore.

He said the result of the Greek vote could lead to either a watering down of the bailout demands by creditors or to a “full blown” exit by Athens from the eurozone currency union.

“From a market point of view, both alternatives carry risks,” he said in a market commentary.

Oil prices are also under pressure from continued high US crude output which is adding to the already oversupplied global market and last-ditch negotiations between Western powers and Iran on curbing Tehran’s nuclear ambitions.

“A report by Baker Hughes on the increase in (US) oil rigs added to the woes of the benchmark prices, which are already under pressure from the ongoing Greek crisis and Iran nuclear negotiations,” said Sanjeev Gupta, head of the Asia- Pacific Oil and Gas practice at professional services firm EY.

“With the Greek referendum voting against acceptance of the bailout and the new deadline of 7 July for reaching an agreement with Iran, oil markets will continue to remain bearish,” he said.

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