The worth of oil has sunk to ranges not seen since 2002 as demand for crude collapses amid the coronavirus pandemic.
Brent crude fell to $22.58 (£18.19) a barrel at one level on Monday, its lowest degree since November 2002.
In the meantime the value of US West Texas Intermediate (WTI) fell under $20 a barrel and near an 18-year low.
Oil costs have fallen by greater than half in the course of the previous month as firms in the reduction of or shut manufacturing.
Along with the drop in demand, a worth conflict broke out earlier this month between Saudi Arabia and Russia.
This started when Saudi Arabia did not persuade Russia to again manufacturing cuts that had been agreed with the opposite members of the Opec oil producers’ group.
The choice got here as refineries all over the world are processing much less crude oil. Demand for transport has been hammered by grounded airways and fewer automobiles on the roads as international locations herald more durable measures to struggle the coronavirus outbreak.
Nevertheless, an analyst stated a collapse in demand from the measures taken to counter the unfold of coronavirus was now the primary issue.
“Oil prices failed to keep pace, with growing (coronavirus) lock-down measures and reports that this could drive global demand down 20%, potentially pushing the world to run out of storage capacity,” stated Morgan Stanley analyst Devin McDermott, citing a forecast by the Paris-based Worldwide Vitality Company.
Shale oil producers within the US have been notably laborious hit by the droop in costs since early March.
There are rising requires the US to droop royalty fee charges from drillers and to purchase extra oil to fill the US Strategic Petroleum Reserve, or have states corresponding to Texas prohibit manufacturing, Mr McDermott stated. The US is now the world’s high oil producer.
“Since the 1930s, states have had the authority to limit oil and gas production in order to support oil prices,” Mr McDermott stated.
“Though this practice is not widely used today, both federal and state regulators still have the ability to place restrictions on production levels.”
