By 0824 GMT, the front-month contract was down $3.20 at $88.63 a barrel. ICE Brent crude futures were down $3.63 at $103.20 a barrel.

Weekend reports that Spanish regional authorities will have to go cap in hand to Spain's central government have driven up Spanish bond yields to critical levels, raising expectations that a sovereign bailout will be required.

The perceived safe haven of the US dollar has strengthened against a basket of currencies to a two-year high, putting further pressure on commodities priced in dollars.