Brent crude oil prices hit their lowest in more than 11 years on Monday, driven down by a rise in global supply that looks set to outpace demand again next year, reports said
Brent futures fell by as much as two per cent to a low of US$36.05 a barrel on Monday, their weakest since July 2004, but recovered at US$36.39 by 1332 GMT.
Reuters has reported that oil production is running close to record highs and, with more barrels poised to enter the market from nations such as Iran, the USA and Libya, the price of crude is set for its largest monthly percentage decline in seven years.
While consumers have enjoyed lower fuel prices, the world’s richest oil exporters have been forced to revalue their currencies, sell off assets and even issue debt for the first time in years as they struggle to repair their finances.
OPEC, led by Saudi Arabia, will stick with its year-old policy of compensating for lower prices with higher production, and shows no signs of wavering, even though lower prices are ‘painful’ to its poorer members.
The price of oil has halved over the past year, dealing a blow to economies of oil producers such as Nigeria, which faces its worst crisis in years, and Venezuela, which has been plunged into deep recession.
Even wealthy Gulf Arab states have been hit. Last week, Saudi Arabia, Kuwait and Bahrain raised interest rates as they scrambled to protect their currencies.
“With OPEC not in any mood to cut production, it does mean you are not going to get any rebalancing any time soon,” energy aspects chief oil analyst Amrita Sen said.
