Oil prices plunge 5 percent as Britain votes to leave EU

Fri Jun 24, 2016 3:17pm EDT
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By Barani Krishnan and Ahmad Ghaddar

NEW YORK/LONDON (Reuters) - Oil prices settled 5 percent lower on Friday after Britain's vote to leave the European Union spurred massive risk aversion and a rally in safe havens like the U.S. dollar that threatened to cut short a three-month-long recovery in global oil markets.

Financial markets have been worried for months about what a British exit from the European Union, dubbed widely as 'Brexit,' would mean for Europe's future, but were clearly not fully factoring in the risk of a 'leave' vote.

The dollar index .DXY jumped about 2 percent, its most since 2008, while sterling GBP= collapsed to a 31-year low after British Prime Minister David Cameron, who campaigned to remain in the EU, said he would stand down by October. [FRX/]

A rallying dollar makes oil and other commodities denominated in the greenback costlier for holders of the euro and other currencies.

Brent crude LCOc1 settled down 4.9 percent, or $2.50, at $48.41 a barrel. It had fallen 6 percent earlier to $47.54.

U.S. crude CLc1 fell 5 percent, or $2.47, to settle at $47.64, its largest one-day decline since February.

The losses were much smaller on the week, with Brent down 1.5 percent and U.S. crude 0.7 percent.

Analysts in oil markets sought to put the Brexit crisis in perspective even as some $2 trillion was wiped off equity bourses worldwide, and money poured into safe-haven gold and government bonds. [MKTS/GLOB]   Continued...

Vote leave supporters stand outside Downing Street after Britain voted to leave the EU.     REUTERS/Kevin Coombs