Oil prices up in Asia on Cyprus bailout deal

SINGAPORE – Oil prices rose in Asian trade Monday after Cyprus and its international creditors struck a 10-billion-euro bailout deal, averting a collapse of the country’s banking system.

New York’s main contract, light sweet crude for delivery in May added 42 cents to $94.13 a barrel and Brent North Sea crude for May delivery increased 44 cents to $108.10 in mid-morning trade.

“The oil market is reacting positively to news that Cyprus has reached a deal,” said Victor Shum, managing director at IHS Purvin and Gertz in Singapore. “There is now more clarity to the events in Cyprus,” he told AFP.

European Union and International Monetary Fund Monday struck a last-minute deal with Cyprus in the early hours of Monday that will qualify the island for a much-needed rescue package to help it service its debt.

“It caps a nervous weekend for traders who were closely monitoring news out of Cyprus. As more details emerge on the draft bailout, risk assets could see a shot in the arm,” said a report by IG Markets Singapore.

The agreement involves breaking up the island’s second largest lender Laiki (Popular Bank), while deposits above 100,000 euros ($130,000) in Bank of Cyprus, the island’s main lender, will take a major “haircut”.

Leaders had been under pressure to reach a deal after the ECB warned it would cut off funding to the island’s banks if nothing had been done by Monday, which would have led to their collapse and likely forced Cyprus out of the eurozone.