The price of oil has dipped again after OPEC, the cartel of the world’s largest producers, failed to agree on calls to cap production.
OPEC has continued to pump out 30 million barrels a day since 2011.
Meanwhile the price per barrel has tumbled from US$115 to around $40 a barrel now.
A fall in demand has seen the price of oil collapse.
Some OPEC countries want to turn off the taps to control supply and the price per barrel, but the world’s largest producer, Saudi Arabia, refused to do so unless every oil producing country agreed to do so.
The stumbling blocks are Iran, where recently lifted sanction means the government wants to generate cash by ramping up production and Russia, which is not a member of the OPEC club and refuses to co-operate with the cartel.
A price war between Saudi Arabia and Russia is not helping.
Russian customers in Poland, Hungary and Sweden are buying at a discount from the Saudis, forcing the Russians to offer even deeper discounts.
The Saudis and Iran are also locked in a turf war in the Middle East, where both nations are on opposing sides of the civil l wars in Yemen and Syria. The Saudi government fears Iran will step in to take market share if production is reduced.
Projects worth billions dumped
While OPEC maintains production, oil companies around the world have dumped $200 billion of projects opening up new wells that would have added to the glut.
Thousands of oil and gas contractors and support workers have lost their jobs in the decimation of the industry and concerns are now seeping through to stock markets, where investors have concerns about profits and dividends of the big oil companies, such as Shell and BP.
Although the oil sector is suffering, falling oil prices is good news.
“With prices still dropping and no agreement in sight within OPEC, it’s likely the cost of fuel will drop another 2p or so a litre in the UK within the next two weeks,” said a spokesman for motoring organisation, the RAC.
“The fall in fuel prices has also contributed greatly to the decrease in inflation not only in the UK, but in many other countries around the world.”