Oil prices lower over Greek reform concerns

Wednesday, 22 February 2012 10:15

SINGAPORE: Oil was lower in Asian trade Tuesday on concerns that Greece may face difficulties delivering on tough economic reforms after clinching a huge bailout from its eurozone partners, analysts said.

New York's main contract, light sweet crude for delivery in April, was down 45 cents at $105.80, while Brent North Sea crude for April delivery shed 55 cents to $121.11 in morning trade.

"There are concerns that Europe will continue to struggle with this debt crisis," said Ker Chung Yang, commodities analyst at Phillip Futures in Singapore.

After weeks of negotiations, European Union and Greek officials reached an agreement early Tuesday for a 237-billion-euro ($310 billion) rescue package that saves Greece from a messy debt default.

Greek government officials have however warned that EU demands for tough fiscal reforms in the country would mean a heavy workload and controversial constitutional changes.

Athens has until the end of the month to approve another batch of spending cuts of over three billion euros tied to the rescue and is called on to amend the constitution to ensure that priority goes to debt repayments.

The situation in the Middle East was also bearing down on the market as crude producer Iran on Wednesday denied UN inspectors probing its nuclear weapons activities access to a key military site.

The visit by the team from the International Atomic Energy Agency (IAEA) was aimed at clarifying issues surrounding possible military dimensions to Iran's nuclear programme.

Western countries have charged that Iran is attempting to produce an atomic weapon, while Tehran has insisted that its programme is solely for producing energy and treating cancer patients.