Oil prices hit its lowest point since December 2017 on Tuesday, following anticipated oversupply in the global crude oil market.
Brent crude futures, the global benchmark fell by 7.34 percent to $64.97, while US West Texas Intermediate (WTI) lost $2 in less than 30 minutes to sell at $55.12 on Tuesday evening.
During its last meeting, the Organisation of Petroleum Exporting Countries (OPEC) and its allies led by Russia acknowledged that an oversupply of oil in the market is imminent in 2019.
Saudi Arabia, a prominent member of the oil cartel, said it would cut exports by as much as 500,000 barrels per day (bpd) in November and December to curb oversupply.
This took prices up on Monday but not significantly so.
The sharp drop in prices was seen after US President Donald Trump tweeted same Monday that Saudi Arabia and OPEC should not cut production to reduce supply.
“Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply,” Trump tweeted.
Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!
— Donald J. Trump (@realDonaldTrump) November 12, 2018
With the US now the world’s top oil producer ahead of Saudi Arabia and Russia, there are indications that traders will keep selling crude at lower prices as a result of oversupply.
A lift in US sanctions on Iran, increased shale oil production coupled with predictions of reduced world demand for oil has kept prices in trenches.
The fall in oil prices is expected to negatively impact the Nigerian economy, which is largely dependent on oil for foreign exchange earnings.