Brent oil price falls below $60 a barrel

NEW YORK: The price of Brent crude oil has fallen below $60 a barrel for the first time since July 2009, the British Broadcasting Corporation reported on Tuesday.

Brent dropped by more than a dollar to $59.75 a barrel, while the price of US crude fell to $54.85.

Oil prices have now nearly halved since June as a result of waning demand and increased supplies.

At the weekend, the head of Opec reiterated that the oil cartel would not try to shore up the oil price by reducing production.

The comments came a couple of days after the International Energy Agency cut its oil demand forecast for 2015.

While cheaper oil prices are set to provide a boost to many economies through cheaper fuel prices, the sharp drop in the cost of crude is affecting many oil producers.

On Tuesday, Russia dramatically increased its interest rate to 17per cent from 10.5per cent in an attempt to halt the slide in the country’s currency, the rouble.

The rouble has lost 50per cent against the US dollar this year as falling oil prices and Western sanctions continue to weigh on the country’s economy.

Goldman Sachs has estimated that up to $1tn of spending on future oil projects could be hit given the recent plunge in oil prices, the Financial Times reported.

If this spending was cancelled, it would cut new output by about 7.5 million barrels a day over the next decade, or about eight per cent of current demand, the paper said. Such a drop in investment could mean that the current supply glut will disappear.