Oil tumbles in Asia as Greek vote shakes world markets

SINGAPORE - Oil fell in Asia Monday as investors digested the implications of Greece rejecting tough austerity demands from creditors which could send the debt-strapped nation crashing out of the eurozone, analysts said.

Greek voters overwhelmingly rejected the bailout terms demanded by international creditors, with official figures from Sunday's referendum showing 61.31 percent voting "No" and 38.69 percent voting "Yes".

"The result of the Greek referendum has thrust the world into uncharted territory," Singapore's DBS Bank said in a market commentary.

US benchmark West Texas Intermediate for delivery in August plummeted $1.88 to $55.05 a barrel and Brent crude tumbled 50 cents to $59.82 in late-morning Asian trade.
 

The IMF headquarters building in Washington, DC. The euro was dropping against the dollar after early results of the Greece bailout referendum suggested the country rejected fresh austerity demands from EU-IMF creditors

"With the No result announced in early Asian trade, we are seeing big mark downs as markets open," said Nicholas Teo, market analyst at CMC Markets in Singapore.

He said the result of the Greek vote could lead to either a watering down of the bailout demands by creditors or to a "full blown" exit by Athens from the eurozone currency union.

"From a market point of view, both alternatives carry risks," he said in a market commentary.

Oil prices are also under pressure from continued high US crude output which is adding to the already oversupplied global market and last-ditch negotiations between Western powers and Iran on curbing Tehran's nuclear ambitions.

"A report by Baker Hughes on the increase in (US) oil rigs added to the woes of the benchmark prices, which are already under pressure from the ongoing Greek crisis and Iran nuclear negotiations," said Sanjeev Gupta, head of the Asia-Pacific Oil and Gas practice at professional services firm EY.

"With the Greek referendum voting against acceptance of the bailout and the new deadline of 7 July for reaching an agreement with Iran, oil markets will continue to remain bearish," he said.



Key dates in the Greek debt crisis
 

Greek voters on Sunday said a resounding 'No' to creditors' terms for an international bailout, raising questions about the country's financial future and its place in the eurozone, in one of the most dramatic twists yet in the country's long-running debt saga.

Here are some key dates in a crisis that has rumbled on for nearly six years.

 

2009

- October: The Greek government of George Papandreou reveals that the national public deficit for 2009 was twice as much as thought -- at 12.7 percent of the country's output, instead of 6.0 percent. The figure is later raised again to 15 percent of gross domestic product (GDP).

- December: The three main credit ratings agencies -- Fitch, Standard & Poor's and Moody's -- downgrade Greece's debt.

 

2010

- January-March: Fears over Greece's finances send its bond yields -- the interest rate the government must pay to borrow -- soaring.

- April: 10-year bond yields leap above 8.5 percent, the highest since the country adopted the euro in 2001. With public debt now at 350 billion euros ($435 billion) and with bond yields surging -- making it unsustainable for Greece to borrow on the markets -- Athens appeals for aid from the EU and the IMF.

- May: Greece becomes the first eurozone country to receive a bailout as the EU and IMF announce a 110-billion-euro package in exchange for painful austerity measures, including harsh wage cuts and tax hikes.

 

2011

- October: As Greece's economic situation deteriorates further, the eurozone proposes a second bailout package of 130 billion euros under which private sector creditors also agree to write off about half the debt owed to them.

 

2012

- February: The eurozone approves Greece's second bailout package.

 

2014

- April: Greece returns to sovereign debt markets for the first time in four years, and posts a primary surplus (which excludes debt interest payments) at the end of the year.

 

2015
 

Greek Prime Minister Alexis Tsipras. (AFP/Prime Minister's Office)

- January 25:  The anti-austerity Syriza party, led by Alexis Tsipras, wins a snap election with a pledge to renegotiate the bailout terms. In five years, national output has been cut by 25 percent, salaries have fallen by more than that, and a quarter of the workforce is unemployed.

- February 20: Greek authorities and its creditor institutions agree to extend aid until the end of June. Athens pledges to come up with reform measures in exchange for the last 7.2 billion euros in rescue funds.

- June 2: After months of bickering, the creditor institutions make a final pitch to Greece regarding the reforms deemed necessary.

- June 5: Tsipras rejects creditor demands for pension cuts and labour market reforms.

- June 10: EU leaders in turn reject a counter-proposal from Greece.

- June 17: The Greek central bank warns for the first time the country could suffer an exit from the eurozone and even the EU if it fails to reach a bailout deal.

- June 24: For the fifth time in eight days, the ECB increases emergency funding for Greek banks.

- June 26: Creditors offer Athens a five-month, 12-billion-euro extension of its bailout programme but say it must seal a deal quickly to avoid an IMF default on June 30.

- June 27: Tsipras calls for a surprise July 5 referendum on the creditors' latest bailout proposals. Eurozone finance ministers accuse Greece of breaking off talks "unilaterally" and refuse to extend its bailout past June 30. In Greece, bank customers rush to withdraw cash.

- June 28: The government orders banks to close until July 7 and imposes capital controls as ATMs run dry and the ECB refuses to increase emergency funding for Greek lenders.

- June 30: Greece's bailout officially expires and the country defaults on a 1.5-billion-euro debt payment to the IMF.

- July 5: More than 61 percent of Greeks vote 'No' to creditors' bailout proposals in a clear political victory for Tsipras, but also deepening the uncertainty over Greece's financial future.


AFP