Oil is now just under $50 per barrel. The Saudis are flooding the oil market likely for both political and market share reasons while China’s demand for the black stuff slackens as their economy slows.
Oil’s dramatic fall in price will have serious effects on revenues and spending in the sector, according to some industry analysts, with one investment firm predicting a sector-wide “recession” that will last for several years.
Both U.S. crude and Brent futures fell to fresh 5½-year lows on Tuesday, with the former slipping below $49 before paring some losses. Weak global demand and booming U.S. oil production are seen as the key reasons behind the price plunge, as well as OPEC’s (Organization of the Petroleum Exporting Countries) reluctance to cut its output.