Oil Prices Rise on Greek Debt Talk Hopes

Oil prices rose in Europe on Monday as financial markets rallied on optimism that a deal would be reached in last-ditch Greek debt negotiations later in the day.

Eurozone leaders will try to hammer out an agreement on Greece's bailout at an emergency meeting Monday. Failure to clinch a deal could put Greece on the road to bankruptcy and an exit from the common currency area.

Brent crude for August delivery rose 0.6% to $63.40 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures for July were trading up 0.9% at $60.12 a barrel.

European stock markets rallied Monday after Greece submitted a last-ditch package of proposals to creditors over the weekend. A senior European Commission official called the plan a "good basis for progress" at Monday's eurozone summit.

If Greece stays in the euro, this could lead to slightly higher oil prices in response to a likely increase in equity markets, said Michael Poulsen, oil analyst at Global Risk Management.

But if no deal is reached and Greece leaves the euro, this would mean lower oil prices until the full effects on the eurozone are known, he added.

Meanwhile, oil market participants are turning their attention to the June 30 deadline for Iran's nuclear negotiations.

A deal between Iran and the West could ease the international sanctions against Tehran and release more Iranian crude on the already oversupplied global market.

"Iranian nuclear negotiations are going to give headwind for crude prices this week," said Daniel Ang, analyst at Phillip Futures. "This deal remains crucial for the current situation as it could cause another round of oversupply."

An excess of 0.8 million barrels a day of Iranian crude could flow into the market at a pace faster than demand could offset, Mr. Ang added.

Nymex reformulated gasoline blendstock for July--the benchmark gasoline contract—fell 0.2% to $2.0546 a gallon, while ICE gas oil for July changed hands at $577.00 a metric ton, up $6 from Friday's settlement.

Eric Yep contributed to this article.

Write to Georgi Kantchev at [e-mail]

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