Oil prices lowest for four years
Oil prices tumbled to new four-year lows today amid expectations that, despite the recent slide, Opec ministers will not take action to cut production.
The cost of Brent crude dipped to around 76 US dollars a barrel, a third below its level in June, as members of the oil cartel gathered in Vienna.
A combination of the US shale boom and weakness in the global economy has resulted in supply outpacing demand.
But Saudi Arabia, which dominates the 12-member Organisation of the Petroleum Exporting Countries, has downplayed the likelihood of a cut in production, with oil minister Ali Naimi arguing that the market would eventually "stabilise itself".
Earlier this month, the Gulf state had even cut the price of oil it sold to the US - seen as an attempt by the kingdom to remain competitive with shale oil.
However, there were reports that Venezuela was calling for a cut in production of two million barrels a day, as ministers gathered for the meeting in Austria today.
The Saudis are able to cope with lower prices but poorer Opec members such as Venezuela and Nigeria need a level closer to 100 US dollars.
Yet some are in a quandary because, though they may wish for a cut in production to stabilise the market, they might not be able to afford to slash output themselves.
Without a cut, supply is on course to exceed 1.2 million barrels a day next year, likely to result in a further price fall.
It is thought that a steep, co-ordinated cut could staunch and possibly reverse the decline. But a modest drop in output of 500,000 barrels per day might not be enough.
In June, the price of Brent crude had reached nearly 116 US dollars as the advance of Islamic State sparked fears over supplies from Iraq.
But gathering gloom over growth - with the eurozone stagnant and Chinese expansion easing - has raised fears of a glut of oil swilling around the world economy.
Brent crude slipped below the 100 US dollar mark in September and has continued to head lower - helpful for petrol-guzzling consumer economies but costly for many oil-producing nations and large oil firms.
In Britain it has helped keep a lid on inflation as the slide feeds through to fuel pump prices though petrol firms face pressure to do more to pass on the lower costs.
Meanwhile, UK-based oil giants BP and Royal Dutch Shell have acknowledged the impact on their business, causing them to tighten the purse strings rather than pursue some costly spending projects.
BP recently reported a fall in quarterly profits and said it had to maintain a "strictly disciplined approach to investment'".
Shell has seen a sharp rise in third-quarter profits but chief executive Ben van Beurden said the "volatility" in prices underlined the need to keep a tight hold on costs and spending as it focused on slimmed-down future plans.
Meanwhile, oilfield services firm Petrofac issued a profits warning earlier this week which sent shares tumbling by a quarter, saying that current oil price expectations were likely to result in a 45 million US dollar (£29 million) hit.
AA president Edmund King said: "It is ironic that, just as drivers are starting to feel the benefit of lower oil prices slowly filtering through, the markets are once again seeking to shore up declining profits for oil exporting companies and countries.
"Price rises now could well impact adversely and, far from increasing profits, could further quell demand as drivers and business feel the pain once again. Low and stable fuel prices are what the global economy and local families and businesses need to move ahead."