The commodity traded at $108.91 at 11:46 GMT on Tuesday morning after eurozone leaders agreed to give lawmakers in Cyprus more control over the implementation of the levy.
Investors with funds tied up in Cyprus have been unable to access their accounts as the country froze all deposits on March 16th and has declared a bank holiday until March 21st to prevent capital flight.
The news has sparked fear in several other struggling nations like Spain and Italy, where many are concerned that the levy could set a dangerous precedent of using individual bank accounts to fund government debt.
At the moment, most are expecting Cypriot lawmakers to reject the levy, something that could drive oil prices even lower. According to Reuters, analysts expect to see oil prices remain unchanged if the levy is passed, but its rejection could cause Brent prices to slide on fears that Cyprus could exit the eurozone.
Although many are not expecting Cypriot lawmakers to pass the levy, most are confident that the uncertainty in the tiny island nation will be contained by the European Central Bank, whose recent efforts to calm the markets have been disrupted by this situation.
Brent could find some support from the US and China in the coming days as the two oil consuming giants push forward in their recovery efforts.
The US Federal Reserve meeting this week will be closely followed for any signs that the Fed is planning to scale back its monetary expansion after Labor Department data on Monday showed unemployment dropping in almost every state.
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