The price of oil continues to fall as Brent crude dropped to a new six-year low.
A barrel of Brent crude fell 5.5 per cent to $47.36 (£31.35) on the North Sea benchmark. This represented the lowest level since early 2009 and continued the downward trend of oil prices in recent months. US crude oil also struggled with five per cent drop putting it at $45.90 a barrel, also a six-year low.
While the falling oil prices have caused concern among major oil producing countries like Russia, it has provided some respite for consumers. In the UK, the price of petrol has been dropping to match the falling oil costs. One garage in Birmingham has even been selling petrol at just 99p a litre. Supermarket Asda also stated that it would be reducing forecourt price by 2p a litre to 103.7p.
Oil has been steadily dropping in price since the turn of 2014 prompting a meeting of the Organization of Petroleum Exporting Countries (Opec). Normally when prices begin to slip, the cartel responds by reducing its output that can help stimulate prices.
However, when Opec members met in November they were unable to come to an agreement on the situation. Members such as Saudi Arabia and non-member Russia had given their backing to retaining the current output level.
Saudi Arabia's oil minister Ali al-Naimi stated in December that Opec would not cut production even if prices dropped below $20 a barrel. Mr al-Naimi argued that the cartel's output was irrelevant when it came to price and was confident that the market would level itself out in the future.
Speaking to the Middle East Economic Survey publication, Mr al-Naimi said: "As a policy for Opec – and I convinced Opec of this, even Mr al-Badri [Opec secretary general] is now convinced – it is not in the interest of Opec producers to cut their production, whatever the price is. Whether it goes down to $20, $40, $50, $60, it is irrelevant."
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