Oil prices fell more than 4 percent on Tuesday as planned production curbs by global producers, led by Saudi Arabia and Russia, failed to allay concerns about renewed oversupply stoked by swelling US shale output. Fears about weaker oil demand amid a potential slowdown in the global economy have also added to worries about how effective the supply cuts will be. The fall in oil prices comes amid a broader sell-off in the global equities market due to persistent worries centred on how the US-China trade spat could hit economic growth. “Prices are continuing to nose-dive,” said Carsten Fritsch at Commerzbank.
“The effect of the announced production cuts after Opec’s meeting [earlier this month] has evaporated entirely.” International benchmark Brent crude fell $1.70 a barrel to $57.91 in mid-morning trading in London, having fallen as low as $57.20 — marking the third consecutive day of declines. Oil price volatility – in three charts West Texas Intermediate, the US benchmark, fell $1.51 a barrel to $48.37, the lowest level since September 2017.
Global producers have agreed to cut production by 1.2m barrels a day to halt a more than 30 per cent slide in oil prices, since hitting $86 a barrel in October. The move came in defiance of US president Donald Trump who had called for Opec to keep output elevated and prices low. But record output from Saudi Arabia above 10m b/d since July coincided with news that the US would issue waivers to buyers of Iranian oil — at the same time as imposing sanctions against Tehran’s economy — allowing more oil than anticipated on to the market.
Still, Iranian output and exports have fallen sharply this year and other producers such as Venezuela have seen a slide in their supplies because of turmoil in their countries. Production and exports from Libya’s largest oilfield, El Sharara, have also been halted due to security issues.