On Tuesday, oil fell briefly below $30 per barrel, widening global concerns about how low oil prices will go. Oil prices last fell below $30 per barrel in December 2003.
On Jan. 12, West Texas Intermediate, the US oil price benchmark, briefly dipped as low as $29.93 a barrel before rebounding back above $30. Brent, the global benchmark, dropped 3.5% to $30.76 a barrel.
Since June 2014, when oil peaked at $108 per barrel, oil prices have been steadily declining, with some analysts predicting that the price of oil could fall to $20 per barrel – and possibly even lower.
Contributing to the continued oil price decline are a number of factors, including the global oversupply of oil; OPEC’s sustained production ceiling; OPEC member states Iran and Iraq, which plan to increase their production levels; the resilience of shale production in the US; China’s weakening economy and rocky stock market; and the strengthening of the US dollar.
On Tuesday, oil prices ended down 3%, representing a seventh straight daily decline. Oil prices are now below the breakeven point for many producers across the globe – and the question that everyone is asking is, “How low will it go?”