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Oil falls as Cyprus bailout details rattle markets

Published on NewsOK Modified: March 18, 2013 at 8:24 am •  Published: March 18, 2013

The price of oil slid to near $92 a barrel Monday as investors grew worried about possible fallout from a plan to pay for a bailout for cash-strapped Cyprus by slapping a tax on deposits in the country's banks.

By early afternoon in Europe, benchmark oil for April delivery was down $1.08 to $92.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 42 cents on Friday.

The deposit tax is part of a plan agreed to on Saturday by Cyprus and its international lenders, and it prompted savers to rush to banks in Cyprus to withdraw as much of their cash as they could.

Adding to the uncertainty, lawmakers in Cyprus postponed a vote on the €10 billion ($13 billion) bailout package until Tuesday evening, as politicians' concerns grew that the tax fell too heavily on smaller savers.

While some analysts said it appeared unlikely that panic would spread to other countries and prompt capital flight from weaker EU economies, lower oil prices were the result of "increased risk aversion" in wake of the Cyprus events, said a report from Commerzbank in Frankfurt.

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