Global oil prices fall over Greece debt crisis concerns
Oil prices in international markets have taken a tumble before the release of US inventory data and mostly due to concerns over Greece debt crisis.
US benchmark West Texas Intermediate for August delivery lost 86 cents to hit USD 58.61 a barrel on Wednesday.
Meanwhile, price of Brent North Sea crude for August delivery also fell 60 cents compared with Tuesday dealings to close at USD 62.99 a barrel, AFP reported.
"The Greece debt crisis may have stoked concerns of a contagion effect to the eurozone, which means that we could see a drop in demand for oil on potentially weaker growth," said Bernard Aw, a strategist at IG Markets.
Greece’s financial crisis has also weighed on the euro, making dollar-denominated oil more expensive for holders of the single European currency.
On Tuesday, the debt-stricken country officially defaulted on its bailout loan with the International Monetary Fund (IMF) following the failure of its negotiation with the so-called troika of international creditors – the IMF, the European Central Bank (ECB) and the European Commission.
Greece received two bailout packages in 2010 and 2012 worth a total of €240 billion (USD 272 billion) from its creditors following its 2009 economic crisis, in return for implementing harsh austerity measures.
According to the terms of the bailout deal, Greece had to make the €1.6-billion payment to the IMF at the end of June.
Greece’s default will potentially set it on a path out of the euro with unpredictable repercussions for the EU's grand currency project as well as the global economy.
During Tuesday dealings, oil prices had rebounded as Iran and six major powers extended a deadline for reaching a nuclear deal, deferring the entry of more Iranian oil into an oversupplied global market.
Iran and the P5+1 group of countries – the US, Britain, France, Russia and China plus Germany – extended their talks for seven days after the expiration of a June 30 deadline for the conclusion of a final agreement on the Islamic Republic’s nuclear energy program.
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