Oil prices fall on Spain debt concerns

Tuesday, 19 June 2012 17:02

Posted by Muhammad Iqbal

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LONDON: World oil prices dropped on Tuesday, with Brent crude briefly hitting a 17-month low point on Spanish debt concerns, analysts said.

New York's main contract, light sweet crude for delivery in July, fell 11 cents to $83.16 a barrel.

Brent North Sea crude for August stood at $95.43 in London midday deals down 62 cents compared with Monday's close and after the contract had hit $94.44 earlier on Tuesday. That was its lowest point since January 10, 2011.

"Euro area challenges continue to pressurise oil prices and we expect these to persist in the short term," said Barclays Capital analyst Amrita Sen.

Spain on Tuesday succeeded in raising 3.04 billion euros ($3.8 billion) in a short-term debt sale but its borrowing costs soared as the eurozone debt storm battered Madrid.

Spain's government won agreement on June 9 for its eurozone partners to extend a rescue loan of up to 100 billion euros to salvage its crisis-hit banks but some analysts believe the country could need three times the amount.

The eurozone debt crisis, along with weaker growth in China, is meanwhile weighing on world crude demand.