Oil hit the skids again this week, with the benchmark future, Brent crude, falling below $95 a barrel. This is the lowest price since mid-2012. Oil has now fallen by almost a fifth since its 2014 peak of $115 in June. It has spent most of the time since the Arab Spring in 2011 in a range between $100 and $120.
The latest slide, notes Andrew Critchlow in The Daily Telegraph, is due to the return of high-grade Libyan oil to the market; production had previously been hampered by the civil war.
The Hong Kong crisis has reinforced worries about subdued demand growth in China, and the dollar's rally is also having an impact. Commodities are priced in dollars and a higher dollar makes oil more expensive in other currencies, which reduces demand.
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The basic pattern in the past few months has been tepid demand growth as the European and Chinese economies have slowed. The fighting in Iraq has not disrupted Middle Eastern production and exports, while tapping shale has led to a glut in the US. Stockpiles are close to record levels.
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Meanwhile investors reckon that sanctions will weaken the Russian economy, further tempering demand.
Weaker oil is excellent news for the world economy, said Allister Heath in The Daily Telegraph. Even taking into account the "extraordinary improvements in efficiency" that mean every unit of GDP consumes far less oil than it did in the 1970s or 1980s, high oil prices "undoubtedly aggravated" the downturn and lacklustre recovery in British and global growth. They jumped to $125 in 2011, up from $60 in 2009.
If prices fall much further, key Opec producer Saudi Arabia is likely to cut production to tighten the market, said Liam Denning in The Wall Street Journal. It can no longer balance its books if oil falls below a yearly average of $89 a barrel.
