Crude oil price plunged to $20 per barrel,on Tuesday, December 15.
Bloomberg data revealed that the world’s cheapest oil is already close to $20 in non-OPEC countries as against $35 in OPEC states.
The sharp drop in crude oil prices followed growing fears that the global oil glut would worsen in the months to come in a pricing war between the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC producers.
Latest data by Bloomberg yesterday noted that prices were sliding in non-OPEC member countries because OPEC member states in economic turmoil want higher prices without having to cut their own production, relying instead on Saudi Arabia to be a ‘swing’ producer.
OPEC, rising from its meeting on December 4, in Vienna, Austria, had decided to maintain crude oil output despite pressure to cut production to ameliorate the effects of the plummeting prices on member countries’ revenues.
OPEC has always insisted on maintaining crude oil production, saying it could only agree to cut production if non-OPEC members would be willing to do the same.
The decision was contrary to expectations from Nigeria and other OPEC members that the organisation would reduce production output to boost crude oil prices which have been on the downward trend since June last year.
Goldman Sachs, one of the most influential banks in commodity markets, also recently said that oil could fall to as low as $20 per barrel amid fears that the world is running out of storage capacity.
In its statement on the global crude oil crash penultimate Friday, the International Energy Agency (IEA) corroborated both reports, saying that the global supply glut was likely to deepen next year and put more pressure on prices.
According to the Bloomberg data, a blend of Mexican crude plunged 73 per cent in 18 months to $28 on December 11, its lowest level since 2004.
There was also Iraq offering its heaviest variety of oil to buyers in Asia for about $25, while in western Canada, its crude has slumped 75 per cent to $21.37, the least in almost eight years.