Lagos - Brent crude prices hit
their lowest in over 11 years on Monday, hounded by a relentless rise in global
supply that looks set to outpace demand again in 2016.
Oil production is running close to record highs and with
more barrels poised to enter the market from the likes of Iran, the U.S. and
The price of crude is set for its largest monthly percentage
decline in seven years.
While consumers have enjoyed lower fuel prices, producers
have cut spending and thousands of jobs and the world's richest exporters have
been forced to revalue their currencies.
They have also sold sell off assets and even issue debt for
the first time in years as they struggle to repair the holes in their finances.
OPEC, led by Saudi Arabia, will stick with its year-old
policy of compensating for lower prices with higher production, and shows no
signs of wavering, even though every dollar lower in the oil price brings fresh
pain to its poorer members.
Brent futures fell by about two per cent to as low as 36.05
dollars per barrel on Monday, their weakest since July 2004.
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Brent crude prices have dropped by nearly 19 per cent this
month, their steepest fall since the collapse of failed U.S. bank Lehman
Brothers in October 2008.
U.S. crude futures dropped 31 cents to $34.42 a barrel,
their lowest since 2009.
"With OPEC not in any mood to cut production ... it
does mean you are not going to get any rebalancing any time soon," Energy
Aspects chief oil analyst Amrita Sen said.
"Having said that, long-term of course, the lower
prices are today, the rebalancing will become even stronger and steeper because
of the capex cutbacks ... but you're not going to see that until
Investment bank Goldman Sachs believes it could take a drop
to as little as 20 dollars a barrel for supply to adjust to demand.
The price of oil has halved over the past year, dealing a
blow to economies of oil producers such as Nigeria, which faces its worst
crisis in years or Venezuela which has been plunged into deep recession.
Even wealthy Gulf Arab states have been hit. Last week Saudi
Arabia, Kuwait and Bahrain raised interest rates as they scrambled to protect