The price of Brent crude oil continues to fall in the wake of Opec’s decision to maintain output levels.
It dropped to a five-year low, below 68 dollars, before recovering but some analysts say the market is still very much in panic mode.
“The implications of falling oil prices are fairly serious because they are countries whose economies depend almost exclusively on their oil production and the fact that oil prices fall means that they see an almost direct reduction on their export revenues,” said Azar Jammine, chief economist at Econometrix.
Brent hit a low of $67.53 a barrel, the lowest since October 2009, before rising 85 cents to $71.00 a barrel by 1454 GMT.
U.S. crude was up $1.01 at $67.16 a barrel, having slipped to an intraday low of $63.72, the lowest since July 2009.
Data suggest the new price environment has hit fast-growing US shale oil production. And with oil prices
down 40 percent since June, the impact is being felt around the world from Iran to Nigeria as producers revise budgets.
But Saudi Arabia is among the winners as the most influential Opec member, and a price drop is also good news for oil hungry Europe, India and China.
Oil lost more than 12 percent after OPEC’s decision last Thursday to curb output in response to huge oversupply in world markets.
Slower than expected growth in China’s manufacturing sector may add further downward pressure on oil.
With Saudi Arabia, Kuwait and the United Arab Emirates, the only OPEC members able to make significant production cuts, there remains enormous uncertainty about how low and how long prices might fall to shut excess shale production