Crude oil prices hit lowest in 11 years

The global supply glut drives down oil prices further to their lowest in more than 11 years after the US decides to lift its 40-year ban on crude exports.

Brent futures fell by about 2 percent to $36.05 per barrel on Monday, the weakest since 2004. US benchmark, West Texas Intermediate (WTI), futures fell 33 cents to $34.40 a barrel, their lowest since 2009.

Prices are on course for their lowest monthly declines in seven years after falling more than 18.5% so far.

The price of oil has halved over the past year, prompted by overproduction by the likes of Saudi Arabia which seems to be harming the kingdom and its allies now.

Last week, Saudi Arabia, Kuwait and Bahrain raised interest rates to protect their currencies amid widening budget deficits which are seriously worrying Persian Gulf Arab rulers.

Because of the Saudi oversupply, OPEC is producing close to record levels above 31.5 million barrels per day, well over the organization’s nominal target of 30 million bpd.

Further weighing on the prices is the US decision on Friday to lift a 40-year ban on crude exports which will send American supplies to global markets next year.

Iran has been calling on OPEC to cut production as the country plans to ramp up its production to normal levels with the lifting of sanctions in the near future.

With OPEC members refusing to reduce output, Tehran has said it would go ahead with its plans to add 500,000 bpd to its production immediately after the sanctions are removed.

There is currently an excess supply of some 1.3 million bpd in the market and a combination of other factors are expected to keep prices depressed for the foreseeable future.

“Really, I wouldn’t like to be in the shoes of an oil exporter getting into 2016. It’s not exactly looking as if there is light at the end of the tunnel any time soon,” Saxo Bank senior manager Ole Hansen told AFP.