Brent Crude Tops $125 on Greek Debt Deal

The virtual certainty that Greece will reach agreement with its creditors on the negotiated debt swap deal is sending Brent crude oil prices near a yearly high this morning. The spot price for Brent right now is $125.39/barrel, and the yearly intra-day high is $128.54/barrel.

The crude market is reacting to the news that more than 50% of Greece’s creditors have accepted the debt swap deal that will cost them 53.5% of their investment when they swap old Greek bonds for new ones. In order for the deal to go through, 66% of bond holders accounting for at least 50% of the value of the outstanding debt must agree to the swap. Observers are confident that those targets will be met.

For oil traders, that means that the eurozone will need more oil. Maybe, but more likely, probably not. New car sales are tanking in Europe, predicted economic growth in the eurozone for this year is negative, and Europe’s largest oil refiner is in bankruptcy. Today’s price spurt will be pulled back, although more slowly than its quick rise. Counting on the eurozone to demand more crude is folly, and the market will take care of that soon enough.