Oil slips to 12-year low

London: Brent oil prices tumbled on Wednesday below $35 for the first time in nearly 12 years, plagued by abundant oversupply and the ongoing row between key producers Iran and Saudi Arabia dimming prosp-ects for production cuts.

The market also tanked on expectations that the US government will later report that rising stockpiles added to the global supply glut last week. In addition, the stronger dollar dented prices because it makes oil more expensive for buyers using weaker currencies, thereby weighing on demand.

At 4 pm IST, European benchmark Brent North Sea crude oil for February delivery sank to $34.83 per barrel — the lowest since July 1, 2004 — before ducking back above $35. “Oil prices have resumed their downswing,” said Commerz-bank analyst Carsten Fritsch.

“A firmer US dollar, concerns about demand and the plentiful supply are weighing heavily on prices.”

In recent years, the market has been plagued by a global supply glut, collapsing from highs above $100 in mid-2014 as abundant supplies were exacerbated by strong output by Opec and the United States.

Last year, the oil market tumbled by about one third after the Organisation of the Petroleum Exporting Countries (OPEC) — which pumps 40 per cent of oil — refused to slash output in both June and December.

Oil continued to spiral lower this week, as escalating diplomatic tensions between Iran and Saudi Arabia added fresh strains on Opec’s unity, as the cartel grapples with a common response to rock-bottom oil prices, experts said.

Added to the picture, Riyadh cut the February price of its European oil exports as the Opec kingpin continues to fight for market share amid a huge glut.

James Hughes, analyst at trading firm GKFX, said the Brent price plun-ge was sparked partly by dwindling hopes of an Opec deal to curb record-high cartel output levels. He added mounting evidence of slowing economic growth in China, the world’s second biggest oil consumer after the US, had fuelled worries over weak demand. At the same time, oil was pushed lower by fresh geopolitical fears after North Korea’s latest nuclear test.