Oil prices slide on fresh eurozone worries

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World oil prices sank Monday as investors fretted that last week's European deal on adopting tougher fiscal rules might not be enough to save the eurozone from its debt crisis, analysts said.

Traders were meanwhile eagerly awaiting this week's output meeting of the Organization of Petroleum Exporting Countries (OPEC), the cartel which pumps about one third of the world's oil.

In London midday deals, Brent North Sea crude for delivery in January shed $1.18 to $107.44 a barrel.

New York's main contract, light sweet crude for January, dipped $1.28 to $98.13.

Late last week, 26 of the 27 European Union members backed tighter budget policing in a "new fiscal compact" to resolve the debt crisis which threatens to crack apart the monetary union and send the global economy into recession.

The 17 eurozone nations signed up to the pact -- which gives the EU more power over national budgets -- while nine non-members "indicated the possibility to take part in this process".

However, Germany's hopes for a treaty revision were dashed when Britain's Prime Minister David Cameron opted out of the plan by using his veto.

"The oil market opened lower on Monday, tracking losses in the global equity markets amid ongoing concerns about the future of the eurozone," said Sucden Financial Research analyst Myrto Sokou.

"Investors are feeling slightly disappointed after the European Union summit, as there is not yet a clear solution for the eurozone's debt issues, so volatility and nervous trading will dominate the markets this week."

Global financial markets have been roiled in recent weeks by worries over the eurozone's escalating debt crisis, which has already resulted in vast EU-IMF bailouts for Greece, Ireland and Portugal.

Meanwhile in Vienna this week, , OPEC oil ministers will gather for a crucial production meeting on Wednesday.

Iran's oil minister on Sunday renewed calls for OPEC members Saudi Arabia and Kuwait to ease back their above-quota production as Libyan oil comes back into the market.

"Today, supply and demand in the market is balanced and Iran's policy is to keep OPEC member states from raising production," Rostam Qasemi said on the oil ministry's website ahead of the meeting.

Iran also wishes to see an "end (to) some countries' extra production which started when Libya exited the market," he said.

Qasemi did not name the countries but the remarks were clearly aimed at Saudi Arabia and Kuwait.

The two Gulf states boosted production to compensate for the suspension of Libyan oil exports after the North African country's descent into civil war this year.

OPEC, of which Iran currently holds the rotating presidency, is expected to maintain its quota system during this week's ministerial meeting, analysts say.

© 2011 AFP

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