Crude oil prices sank in Asia today as eurozone debt fears were compounded by disunity within the European Central Bank even as Greece announced a new round of Budget cuts, analysts said.

New York’s main contract, light sweet crude for delivery in October, dived $1.23 to $86.01 a barrel.

Brent North Sea crude for October delivery fell $1.02 to $111.75.

All eyes were on Europe’s debt crisis yet again as Greece announced a fresh round of Budget cuts in a renewed bid to stave off a debt default that traders fear would bring the region’s banks to their knees.

“What’s causing the fall is fear about the eurozone debt issue, fear about Greece going into default, hence pulling European banks into a collapse like the Lehman situation,” said Mr Victor Shum, Senior Principal of Purvin and Gertz energy consultants in Singapore.

“That’s the fear driving the markets, it’s all eurozone debt related,” he told AFP.

US banking titan Lehman Brothers was forced to declare itself bankrupt in 2008 after its risky bets on the US housing market turned bad, precipitating the global financial crisis that year which ravaged economies worldwide.

Despite Greece on Sunday announcing €2 billion in new Budget cuts, traders were disheartened by disharmony within the European Central Bank as it struggled to enact measures to prevent a Greek default.

Germany’s main representative on the ECB Executive Board and the ECB’s Chief Economist Mr Juergen Stark on Friday announced his resignation “for personal reasons” well before the end of his term of office in May 2014.

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