World oil prices sank to multi-month lows today, as the dollar hit a 22-month peak against the European single currency on concerns over a possible Spanish bail-out.
Brent North Sea crude for July slid to $105 a barrel, touching the lowest point since December 20.
New York's main contract, West Texas Intermediate crude for delivery in July dropped as low as $89.10 a barrel, striking a level last seen on October 24.
Asian and European stock markets sank today and the euro hit a new 22-month low at $1.2434, investor sentiment was battered by mounting concerns over a potential Spanish bail-out, dealers said.
The stronger greenback makes dollar-priced crude more expensive for buyers using weaker currencies, like the euro. In turn, that tends to dent oil demand and pull prices lower.
Analysts said that Spain remains the key worry for the euro zone debt crisis. Investors are worried that Spain - the euro zone's fourth largest economy - could follow Greece, Ireland and Portugal in seeking a vast international bailout. This would likely weigh on crude demand.
Across the Atlantic, meanwhile, analysts forecast US crude inventories to remain at the highest level for this time of the year in 22 years, indicating faltering demand in the world's largest oil-consuming economy.
Early forecasts call for US crude stocks to drop by 400,000 barrels after rising by more than 35.4 million barrels over the past eight weeks. Weekly oil inventory data from the US Energy Information Administration is expected to be released tomorrow, a day later than usual due to Monday's Memorial Day public holiday.
