Brent crude was down four percent Friday afternoon at $27.50 per barrel. US crude was five percent lower at $21.47 per barrel.
Prices were on track for their fifth weekly drop in a row as coronavirus ravages economies around the world.
Containment measures have caused demand to slump and supply chains to be severely disrupted, dramatically lowering demand for oil.
The price war launched by Saudi Arabia almost three weeks ago after talks with Russia over price stabilisation broke down has sent prices to their lowest level in 17 years. The Brent crude price was around $65 per barrel at the start of January.
“In recent days there has been a lot of chatter that demand for oil is going to be hit severely in the months ahead, hence by dealers are dumping the energy,” said David Madden, market analyst at CMC Markets.
“The bitter price-war between Saudi Arabia and Russia is hurting oil too.”
Edward Moya, senior market analyst at Oanda, said the lack of storage for crude oil was a problem. Energy prices could tumble further if countries do not have anywhere to store the oil Saudi Arabia is producing during its price war.
“It seems market dislocations will happen as producers will start running out of room store crude. Roughly three-fourths of the world storage facilities are already full,” Moya said.
“If the Saudis and Russians follow through with the unleashing of record oil supply next month, energy markets will have to brace for another plunge in oil prices.”
Faith Birol, head of the International Energy Agency, yesterday said oil prices could fall by 20 percent with 3bn people around the world on lockdown.
“One would expect that Saudi Arabia will provide a constructive support to the stabilisation of the global oil markets based on their past record,” Birol said.
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