This morning, the oil prices have experienced a sharp decline going down to their lowest point in more than a year as the output of the United States of America looks set to reach 8 million barrels per day by the end of the year.
The price of Brent crude, the international standard, fell off a cliff at around 9 am UK time, falling by approximately four percent to $57.27 per barrel. However, it was able to regain some ground later and was trading down by 2.6 percent at $58.12 at around 11 am.
The prices were pushed lower as the production reached near record highs in Saudi Arabia and the United States, while the output of Russia has been at its highest ever levels in December.
Earlier this month, Opec, the cartel of the oil producers and its allies, known as Opec+, agreed to decrease the production by 1.2 million barrels per day in an attempt to stabilise the prices at around $60 per barrel.
However, the cuts are not set to come into effect until the new year.”
Benjamin Lu Jiaxuan of Singapore-based brokerage Phillip Futures stated: “Rising US shale production levels along with a deceleration in global economic growth have threatened to offset Opec+ efforts.”
He added: “Market confidence remains extremely delicate.”