US benchmark West Texas Intermediate (WTI) for March delivery plunged by as much as 2.7% to $44.35 a barrel in New York, and Brent crude for March tumbled by up to 1.9% in London.
Both contracts regained some ground and by mid-morning trade in Asia, WTI was trading at $45.14, down 45 cents or 0.99%, and Brent was at $48.44, off 35 cents or 0.72%.
“Oil prices plunged just when they opened. We believe that the initial drop was sparked by the Greek elections,” said Daniel Ang, an investment analyst with Phillip Futures in Singapore.
“We even saw a glimpse of panic selling once the market opened. However, prices did rebound shortly after it dropped,” he told AFP.
The victory by the Syriza Party, whose anti-austerity policies have sparked fears Greece could exit the eurozone, sent the euro plunging to fresh 11-year lows against the US dollar.
Analysts say this makes dollar-priced oil more expensive, denting demand and adding further downward pressure on oil prices.
Syriza wants to renegotiate the terms of Greece’s 240-billion-euro ($269 billion) bailout deal with the European Union and the International Monetary Fund which the party says is stifling any chance Greece has of economic recovery.
Oil has lost more than half its value since June last year when the commodity was sitting at more than $100 a barrel due to a supply glut, boosted largely by robust US production, and weak global demand.