Oil prices hit a four-year low in the wake of the decision by the Organization of the Petroleum Exporting Countries (OPEC) not to cut output.
Brent crude fell to a fresh four-year low under $72 a barrel on Friday after OPEC decided not to cut output, a move investors said would leave oil markets heavily oversupplied. The price of Brent had dived by more than $5 a barrel on Thursday after OPEC announced no change to its production plans following a meeting in Vienna, Reuters reported.
The price of US oil fell to $67.75 a barrel - the lowest level since May 2010.
Oil prices, oil-related shares and oil-linked currencies all tumbled on Friday, in the wake of OPEC's decision.
European oil and gas stocks dropped 3.7 percent, dragging the pan-European FTSEurofirst 0.4 percent lower to 1,387.12 after a five-day winning streak.
The euro and the yen both lost ground to the safe-haven dollar, which also made sharp gains against the currencies of oil-rich countries, rallying to as much as 7 Norwegian crowns, a high not seen in over five years.
The plunge in oil prices weighed on inflation expectations, pinning euro zone sovereign bond yields at record lows after data showed cheaper energy helped push annual inflation in the bloc back to a five-year low of 0.3 percent in November.
Although a lower oil price helps support economic growth, it may undermine efforts to avert deflation in Japan and Europe.
Oil tumbled into a bear market this year as the US pumped the most in more than three decades and conflict in the Middle East and Ukraine failed to disrupt supply. While OPEC’s 30-million-barrel limit has been in place since 2012, the group actually produced almost 1 million barrels more last month, data compiled by Bloomberg show.
No Rush
Following the meeting in Vienna, OPEC's secretary general Abdallah Salem Al-Badri said the group would not try to bolster prices by cutting output. "There's a price decline. That does not mean that we should really rush and do something," he said.
“We will produce 30 million barrels a day for the next 6 months, and we will watch to see how the market behaves,” OPEC Secretary-General Abdalla Al-Badri told reporters in Vienna after the meeting. “We are not sending any signals to anybody, we just try to have a fair price.”
The group maintained its collective production ceiling of 30 million barrels a day, Saudi Oil Minister Ali Al-Naimi said Thursday. "It was a great decision," Al-Naimi said as he emerged smiling after around five hours of talks.
Iranian oil minister Bijan Namdar Zanganeh told reporters that he was “not angry” about the decision, but it was “not in line with what we wanted.”
Zanganeh said non-OPEC countries should make an effort to help rebalance the market given the recent sharp fall in oil prices. In this situation I believe we need to have the contribution of non-OPEC producers for managing the market," he said Wednesday, before the meeting.
"OPEC never forgets its responsibility about adjusting the income of its members, and it has showed that under very difficult conditions it can manage the issues with its wisdom," Zanganeh said.
Need for Sacrifice
Venezuela, whose currency reserves are close to the lowest in 11 years, planned to push for a production cut, Rafael Ramirez, Venezuela’s OPEC representative, said before the meeting started. “Everybody has to make some sacrifice,” Ramirez said, estimating the global oversupply at 2 million barrels a day.
Ramirez said he accepted the decision as a collective one and hoped that lower prices would help drive some of the higher-cost US shale oil production out of the market. "In the market, some producers are too expensive," he said.
Kuwaiti Oil Minister Ali Saleh al-Omair said OPEC would have to accept any market price of oil, whether it were $60, $80 or $100 a barrel. Iraq's oil minister, Adel Abdel Mehdi, said he saw a floor at $65-70 per barrel.
Ministers from Kuwait, the United Arab Emirates and Angola said they were concerned about the surplus in the market as they arrived at the group’s headquarters.
