LONDON: Global oil prices slid on Monday as a budget impasse in the United States threatens to shut down parts of the economy, which is the world's top consumer of oil.
Brent North Sea crude for delivery in November dropped 70 cents to stand at $107.93 a barrel in London midday deals.
New York's West Texas Intermediate for November lost $1.04 to $101.83 a barrel.
Crude futures tracked losses on global equity markets, as investors across the world fretted over the possibility of a looming US government shutdown.
The US is the world's biggest oil consuming nation and the health of its economy is therefore a key influence on crude prices.
"The energy sector was rather concerned the US budget impasse could hit the country's economic growth which in turn would hurt demand for oil," said dealer Jonathan Sudaria at traders Capital Spreads.
Lawmakers have one final day to try to prevent the first US government shutdown in 17 years, but a deal appeared remote Monday as congressional leaders showed little intent to compromise.
With Congress going into crunch sessions ahead of an 11:59 pm (0359 GMT Tuesday) deadline, a House Republican leader offered a glimmer of hope when he hinted that his party could offer a new plan that might pass muster in the Democratic-held Senate.
"Crude oil prices retreated sharply on Monday... as the prospect of a shutdown of the US government seems increasingly likely, causing further uncertain and nervous trading conditions," said Myrto Sokou, senior analyst at London-based brokerage Sucden Financial.
The US debt ceiling must also be raised before mid-October, which is when the government will otherwise run out of money to pay its bills.
If the spending limit is not hiked, Washington will be unable to service its debt obligations and will in turn default. A similar stand-off in 2011 sent global markets sliding and led to a historic downgrade of the country's top AAA sovereign rating by Standard & Poor's.
"With Democrats and Republicans having huge difficulty in coming to an agreement, the risk of a huge US default is keeping investors on edge," said Inenco analyst Gary Hornby.
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