$92 a barrel Monday as investors grew worried about possible fallout from a plan to pay for a bailout for cash-strapped Cyprus by slapping a tax on deposits in the country's banks.
By early afternoon in Europe, benchmark oil for April delivery was down $1.08 to $92.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 42 cents on Friday.
The deposit tax is part of a plan agreed to on Saturday by Cyprus and its international lenders, and it prompted savers to rush to banks in Cyprus to withdraw as much of their cash as they could.
Adding to the uncertainty, lawmakers in Cyprus postponed a vote on the €10 billion ($13 billion) bailout package until Tuesday evening, as politicians' concerns grew that the tax fell too heavily on smaller savers.
While some analysts said it appeared unlikely that panic would spread to other countries and prompt capital flight from weaker EU economies, lower oil prices were the result of "increased risk aversion" in wake of the Cyprus events, said a report from Commerzbank in Frankfurt.
"In the short term the pressure is likely to continue as further financial investors are expected to withdraw from the market," Commerzbank said.
On Monday, the euro slid against the dollar and other major currencies. A stronger dollar pushes down oil prices, making crude more expensive for traders using other currencies. The euro was down to $1.2929 from $1.3080 late Friday in New York.
Brent crude, used to price many kinds of oil imported by U.S. refineries, was down $1.56 to $108.26 per barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex:
— Wholesale gasoline lost 4.65 cents to $3.1038 a gallon.
— Heating oil fell 3.29 cents to $3.9977 a gallon.
— Natural gas added 6.4 cents to $3.936 per 1,000 cubic feet.
Pamela Sampson in Bangkok contributed to this report.