A barrel of the black stuff, which consistently traded above $100 between 2011 and 2013, now costs around $35, as OPEC continues to pump out the oil. Reasons include a bid to halt rival industries like shale “fracking.”
Oil prices sank to the lowest level in seven years on Monday, hammering stocks and raising concern across the globe as markets brace for a US interest rate hike later in the week.
Brent crude – the international standard – fell as low as $36.62 (33.32 euros) a barrel at one point, the lowest it’s been since December 2008. The US standard West Texas Intermediate (WTI) fell below $35 on Monday, the first time that’s happened since February 2009.
Prices have tumbled sharply since mid-2013, when oil was trading closer to $120 per barrel.
Markets in Frankfurt, London and Paris all slid on Monday along with the oil prices, with investors deserting several traditional energy companies, also in the wake of the global climate accord struck at the weekend in Paris. Shell, BP, Total, Eni, Repsol and OMV prices all slid, some by more than 4 percent, as did indices in key oil-producing countries like Russia and Saudi Arabia. In the US, Chevron, Consol Energy and NRG Energy all took hits in early trading.
The oil-price drop was compounded by investors’ existing jitters regarding a probable interest rate rise from the US Federal Reserve – after nearly a decade of rock-bottom rates – this Wednesday.
The Organization of the Petroleum Exporting Countries (OPEC) decided on December 4 not to cut its output – seeking, among other things, to hinder US shale “fracking” firms from gaining a bigger foothold in the market. OPEC member Iran will also increase production in the near future as sanctions are lifted following the US and EU-brokered nuclear deal earlier this year.
blc/msh (AP, Reuters, AFP, dpa)