World oil prices sank this morning as investors worried that last week's European deal on adopting tougher fiscal rules might not be enough to save the euro zone from its debt crisis.
Traders were meanwhile eagerly awaiting this week's output meeting of OPEC, the cartel which pumps about one third of the world's oil.
By lunchtime, Brent North Sea crude was down $1.18 to $107.44 a barrel. US crude dipped $1.28 to $98.13.
OPEC oil ministers will gather in Vienna for a crucial production meeting on Wednesday.
Iran's oil minister on Sunday renewed calls for OPEC members Saudi Arabia and Kuwait to ease back their above-quota production as Libyan oil comes back into the market.
"Today, supply and demand in the market is balanced and Iran's policy is to keep OPEC member states from raising production," Rostam Qasemi said on the oil ministry's website ahead of the meeting.
The two Gulf states boosted production to compensate for the suspension of Libyan oil exports after the North African country's descent into civil war this year.
