OIL prices have tumbled to their lowest levels since mid-July after falling 5% on Thursday to below $78 a barrel.
As recently as September, Brent crude prices were nearing $97 a barrel, while the World Bank warned of a worrying outlook should the ongoing conflict in the Middle East escalate.
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But the slump comes as investors worry about global oil demand following weak data from the US and Asia.
World Texas Intermediate crude (WTI) also dropped nearly 5% to $72.90, both it and Brent crude now at their lowest since July 7.
The price fall will be a boost to motorists who will benefit from cheaper petrol and diesel, but stocks at the UK’s energy giants tumbled.
BP fell 2.84% (13.7p) to 468.4p, while Shell dropped 3.04% (80p) to 2,555.5p. Shares at Harbour sank 7.37% (17.8p) to 223.9p.
Just last month the World Bank produced three risk scenarios that could happen if disruption in the Middle East develops further, based on historical experiences.
- “Small disruption scenario”. Global oil supply would be reduced by 0.5million barrels to 2million barrels a day, similar to that seen during the 2011 Libyan civil war. Prices would rise by 3% to 13% to between $92 and $103 a barrel.
- “Medium disruption scenario”. Global oil supply would be reduced by 3million barrels to 5million barrels a day, similar to that seen during the 2003 Iraq war. Prices would rise by 21% to 35% to between $109 and $121 a barrel.
- “Large disruption scenario”. Global oil supply would be reduced by 6million barrels to 8million barrels a day, similar to that seen during the 1973 Arab oil embargo. Prices would rise by 56% to 75% to between $140 and $157 a barrel.