U.S. crude oil price tumbled on Tuesday as euro zone's economic contraction caused demand concerns.

The EU data showed on Tuesday that the economy in the euro zone contracted 0.3 percent in the fourth quarter. As China set its 2012 growth target at an eight-year low of 7.5 percent, worries about global economic growth curbed worldwide crude demand expectation.

Besides, Greek debt uncertainty resurfaced and weighed on the markets. Investors doubted Greece's crucial debt swap deal, remaining unsure of whether enough investors would participate to help the debt-burdened country avoid defaulting.

All the woes pushed the euro down against the dollar. The dollar index rose nearly 0.7 percent, making crude less attractive.

Meanwhile, six countries including the U.S., Russia, China, France, Britain and Germany has agreed to accept Iran's offer for more talks on its nuclear program. And Iran also said it would give the UN's nuclear watchdog access to its military site. Tension between Tehran and the West seemed to start easing. Less fear of oil supply disruption among the investors contributed to crude's sharp retreat.

Light, sweet crude for April delivery dropped 2.02 dollars, or 1.89 percent, to settle at 106.72 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude for April delivery fell 1.82 dollars, or 1.47 percent to close at 121.98 dollars a barrel.