Crude oil prices tumbled to their lowest in nearly seven years yesterday after the Organisation of the Petroleum Exporting Countries’ (Opec) failed to address a growing supply glut. A stronger dollar made it more expensive to hold crude positions.

Brent and US crude futures fell as much 5 per cent in belated reaction to an Opec policy meeting on Friday which ended without an agreement to lower production.

For the first time in decades Opec oil ministers dropped any reference to the group’s output ceiling, highlighting disagreement among members about how to accommodate Iranian barrels once Western sanctions are lifted.

US crude’s West Texas Intermediate (WTI) futures were down almost $2 at $38.04 a barrel. Its session low of $37.96 was barely above 6½-year lows of $37.75 struck in August.

WTI forward contracts out to 2024 dropped to below $60.

Brent futures fell $1.80 to $41.20, their lowest since March 2009.

US diesel futures prices also hit their lowest since May 2009 while US gasoline fell to a one-month low as the selloff extended to a wider swathe of the petroleum complex.

Opec’s output of more than 30 million barrels per day (bpd) has compounded an oil glut, pushing production 0.5 million to 2 million bpd beyond demand.

Opec kingpin Saudi Arabia, the world’s biggest oil exporter, thinks unconventional oil producers, including US shale drillers who have fed the glut, will eventually be squeezed out of the market by high production costs and low selling prices.

Saudi Aramco chief executive Amin Nasser told a conference in Doha he hoped to see oil prices adjust at the beginning of next year as unconventional supplies start to decline.

Patrick Pouyanne, CEO of French oil company Total, said a 2016 rebound would be premature as production growth would still outstrip demand. – (Reuters)