Oil prices rallied today on positive demand prospect, after an EU-IMF plan was approved by eurozone ministers to reorganise Cyprus‘s banking sector, avoiding further crisis in the region.

Brent crude rose by 46 cents to $108.12 a barrel, while US oil increased by 41 cents to $94.12, reported Reuters.

Cyprus managed to make a last minute deal with international lenders for a $13bn bailout plan, which will close down the island’s second-largest bank and impose heavy losses on uninsured depositors.

The plan, which was promptly approved by eurozone finance ministers, will safeguard the country from a financial crisis by shutting down Popular Bank of Cyprus and transferring deposits of less than €100,000 to the Bank of Cyprus to form a "good bank".

The deal, however, did not boost oil prices any higher, as investors had anticipated European policymakers would reach a last-minute agreement.

"Cyprus managed to make a last minute deal with international lenders for a $13bn bailout plan."

On Friday, markets also received a partial boost, after Italian President Giorgio Napolitano requested for centre-left leader Pier Luigi Bersani to consider if he can win adequate support in Italy’s fractionated parliament to form a government.

Ongoing tensions in the Middle East also provided some surge to oil prices, with supply disruptions still remaining a key concern for investors.

The resignation of Syria’s main opposition group leader on Sunday not only weakened the two-year rebellion against President Bashar al-Assad’s rule, but also made it difficult for Western efforts to support the rebels.

Investors are expecting data from China and the US this week to get a further indication on the demand outlook in the world’s two leading oil consumers.

Image: Bank of Cyprus offices in Aglandjia, a suburb of Nicosia, Cyprus. Photo courtesy of Petros3.