Commodities

Crude oil prices down on Cyprus deal

PTI Singapore | Updated on March 12, 2018

Oil prices eased today after a shock levy on bank deposits in Cyprus and a US survey showing a dip in consumer confidence affected the market sentiment, analysts said.

New York’s main contract, light sweet crude for delivery in April, dropped $1.18 to $92.27 a barrel and Brent North Sea crude for May delivery shed $1.34 to $108.48.

“Oil prices have dropped in line with expectations regarding Cypriot developments,” said Jason Hughes, head of premium client management at IG Markets Singapore.

He said that while the details remained unclear, the Cyprus move may force foreign investors trading with euro zone-based companies to “question their arrangements” in the region.

Euro zone finance ministers and the International Monetary Fund had on Saturday agreed on a $13-billion bailout deal for Cyprus, the fifth euro zone member to be saved from bankruptcy.

Under the deal, a one-off, unprecedented “levy” of up to 9.9 per cent will be imposed on all bank deposits in Cyprus — the first euro zone bailout in which private depositors are having to help foot the bill.

At the same time, a “withholding tax” will be imposed on interest on bank deposits, in a further hit for private investors in the Cypriot banking system.

President Nicos Anastasiades had yesterday called the controversial bailout deal the “least painful” option for the financially embattled island, as rejecting the EU demands would have seen Cyprus exiting the euro zone and sinking into bankruptcy.

“The issue is not as simple as whether the Cypriot Government supports the bailout. The market is worried that it may send the wrong message on the safety of bank deposits in other EU nations,” DBS Group Research said in a report.

Sentiments were also hit by a key index on Friday that showed a dip in US consumer confidence, possibly pointing to a slowing of household spending.

Published on March 18, 2013

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