Brent Down as Greek Plan is Criticized
News that the EU finance ministers reached a deal to release financial aid to Greece and restructure their bailout agreement fizzled out on Wednesday morning, and the markets responded. Brent crude oil dropped near $109.75 on Wednesday, responding to resounding doubts about the security of the Eurozone.
The Greek plan has been criticized by many analysts as not doing enough to help the country get out from under its heavy debt burden. Many claim that without some type of debt write off, the country can never recover. Even if the plan is regarded as a viable way to ease Greek debt, many claim the problems in Spain and Italy are enough to tip the region's economy into further recession.
The U.S. fiscal cliff has also weighed on investors' minds as the number one oil consumer may face a recession if no deal is struck regarding the country's deficit. The government seemed to be working toward a compromise, but Senate Majority Leader Harry Reid made statements on Tuesday expressing disappointment with the progress between Democrats and Republicans. This uncertainty has lead to a bit of pressure on crude oil and as the New Year draws closer, many are expecting that pressure to increase.
Tension in the Middle East supported Brent prices, as the political crisis in Egypt threatened to interrupt oil supply and destabilize the entire region. Protests against Egyptian President Mohamed Mursi continued for the fifth day on Tuesday, as opponents of the President called for him to retract his decree that none of his decisions can be legally challenged.
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