Fast falling oil prices on the international market has become a matter of concern for oil producing companies who have suffered loss of revenue of record proportions. Ghana, Nigerian and Venezuela are some of the biggest victims.
To make matters worse, another major global forecast has suggested that oil prices will fall further lower to as low as $20 a barrel. This is the extreme low "cost price" predicted since the autumn by Goldman Sachs for early next year.
Iran reckons it could increase its output by around one million barrels a day. The oil would enter a global market that is already oversupplied by up to two million barrels a day. The IMF says this will bring renewed downward pressure on the beleaguered oil industry that will cause prices to fall from their current levels by between $5 and $15 a barrel, The Guardian reports.
Given prices are currently in the mid-$30s per barrel, this implies a fall back to the early 2000s level of around or below $30, or as low as $20. At this price it's likely there will be a sharp decrease in investment and production that should see a sustained – and perhaps rapid – recovery.
The news comes after oil hit another 11-year low for the second consecutive trading session yesterday. International benchmark Brent crude fell to just a few cents above $36 a barrel, but Reuters says the rolling over of monthly futures contracts has prompted a modest recovery to around $36.60 a barrel this morning.
US benchmark West Texas Intermediate is now trading only marginally lower than Brent since the recent budget deal in the US lifted an export ban, with the price around $36 a barrel this morning.
As for the consequences of falling oil prices, the International Monetary Fund says it reckons the slump would mean a 0.3 per cent boost to the global economy next year. This would be the net effect of higher consumer spending as a result of fuel and energy bills falling, minus the drag of job losses and reduced investment.