LONDON—Crude-oil futures were down around 1.5% as investors abandoned the euro, sending it to a seven-month low against the dollar on heightened concerns of a Greek default.
Ahead of the New York day, the October Brent contract on London's ICE futures exchange was down $1.89, or 1.7% at $110.97 a barrel. The October contract on the New York Mercantile Exchange was down $1.22, or 1.4%, at $86.02 per barrel.
Brent crude prices plunged as European stocks slumped and bearish sentiment prevailed after the Greek government's announcement Sunday of a new tax to cover a budget shortfall did little to reassure markets of the country's financial stability.
Analysts said these factors were likely to weigh on oil prices for the rest of the day.
"Europe is the fourth-largest oil consumer in the world and it's not doing well at the moment, so that's most important," said Thina Saltvedt, a senior oil market analyst at Nordea Bank Norge.
Speculation that Moody's may cut credit ratings of French banks was also weighing on the market, she added.
Market participants will also be looking to monthly reports on the oil market from the Organization of Petroleum Exporting Countries and the International Energy Agency for an outlook on fundamentals. The closely watched IEA report is due Tuesday.
Expectations of increased supply and weak demand were weighing on prices, analysts said.
Chinese crude oil imports in August were unchanged from a year ago, something that's "not hugely positive," said Olivier Jakob, managing director of Petromatrix.
"On the fundamental side, we're starting to count the days before we start to see Libyan crude oil back on the market, although on small volume," he added.
