Crude futures hit three-week lows on Monday as Greece shut its banks and imposed capital controls, causing widespread risk aversion, while Iran looked likely to extend nuclear negotiations with the West to export more of its oil into an oversupplied market.
The dollar surged against the euro to early June highs on worries over the Greek crisis before retreating in the New York trading session for crude, limiting the downside for oil. A softer dollar makes commodities priced in the greenback more affordable for holders of other currencies.
"It's all about Greece today. Also, the Iran deadline for a nuclear pact could be pushed out by a week or so from tomorrow, so it's a risk-off day," said Tariq Zahir, an oil bear at Tyche Capital Advisors in Laurel Hollow, New York.
Greeks woke up to shuttered banks, closed cash machines and a climate of rumors and conspiracy theories on Monday as a breakdown in talks between Athens and its creditors plunged the country deep into crisis.