Brent Crude has fallen to its lowest point since March 2009, hitting a mark below $45 per barrel. The oil benchmark fell on concerns that Chinese demand is slowing, while US and Iran continue to increase an already strong global surplus.
Brent futures tumbled by 4.8 percent on Monday morning, extending a 7.3 percent drop last week.
With weak Chinese growth reported, commodities have fallen to a 16-year low. Iran’s Oil Minister Bijan Namdar Zanganeh also vowed to expand output “at any cost.”
Despite plummeting prices, the number of active oil rigs in the U.S. rose for the seventh time in eight weeks.
Oil prices have fallen off a cliff since May, losing 30 percent of their value.
U.S. crude stockpiles are almost 100 million barrels above the five-year seasonal average and in a report, Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, adds, “There is no end in sight to the nose-dive that oil prices have been experiencing. It is impossible to say how long the price slump will continue and where oil prices will ultimately bottom out.”
Brent for the October settlement declined by $2.18 to $43.28 a barrel on the London-based ICE Futures Europe exchange. WTI for October delivery decreased as much as $1.76, or 4.4 percent, to $38.69 a barrel on the New York Mercantile Exchange, the lowest price since February 2009.
Commodities have been hit hard with the Bloomberg Commodity Index of 22 raw materials falling as much as 2.2 percent to the lowest level since August 1999.
Oil prices could take another hit as sanctions against Iran are lifted. The country was OPEC’s second-largest producer before international sanctions were leveled against the country. Negotiators last month reached a deal that would lift sanctions, thus adding more production to an already stacked global oil supply.