Oil prices declined today after the dollar gained strength due to an unexpected bailout proposal for Cyprus, sparking a fresh crisis in the eurozone.
Brent crude declined by $1.52 a barrel to a low of $108.30, while US oil dropped by $1.10 to $92.35, reported Reuters.
In an unusual shift from earlier aid packages, eurozone finance ministers have proposed Cyprus savers sacrifice a portion of their deposits in return for a €10bn ($13bn) bailout for the island.
On Monday, Cyprus’s 56-member parliament is expected to vote on whether depositors have to give up part of their savings to fund a bailout, which is mainly required to recapitalise banks.
A further drop in prices was, however, capped by speculations of a stable revival in demand growth from the US. In February, US manufacturing production improved, indicating that the economy is showing clear momentum.
The Federal Reserve said factory output rose by 0.8% in February, after falling by 0.3% in January.
Simmering tensions, as a result of the ongoing stalemate between the West and Iran over Tehran’s controversial nuclear programme, are also expected to ensure that prices don’t drop further.
The US has imposed sanctions on Iranian companies that provide insurance services to Iran’s main petroleum shipper, as part of its strategy to block Tehran’s funding of its nuclear programme.
Image: Speculations of a stable revival in demand growth from the US capped further oil price decline. Photo courtesy of freedigitalphotos.net / sakhorn38.