Major U.S. stock indexes finished down more than 2 percent, with the Nasdaq off more than 3 percent. Standard & Poor’s 500 falling 2.5% to take the index below 1,900 points for the first time since September. While Brent crude price slips below $30 a barrel for the first time in nearly 12 years. Earlier, China’s stock market fell more than 2% due to fall in exports.
Experts say that growing fears of a weakening outlook for the global economy, made worse by falling oil prices, was behind the steep falls. Some oil analysts predicts that the price could fall as low as $10 per barrel. So the middle east and other oil exporting countries would have to face a serious crisis in maintaining their economic status.
Brent Crude Price Fall – Major Cause
Over the past two years, global crude oil prices have been in free-fall. In June 2014, you had to spend $110 to buy a barrel of Brent crude. By early 2015, that came down to $60 and now it is slipping below $30. The major reason for this fall is the introduction of shale oil. More and more drilling is taken place to unlock vast quantities of oil from shale formations in places like North Dakota and Texas.
Many people expected Saudi Arabia and other oil producers in OPEC would cut their own oil production to prop up prices, as they had done in the past. But the Iran-Saudi politics doesn’t allow a consensus over oil production. As a result, brent crude price keep on falling. Now, the global economy is on the verge of another recession, this time, fueled by oil exporting countries.