Brent crude futures dipped by over 5% to US$41.2 per barrel, while US crude futures sank to US$38.4 a barrel. As per Reuters, oil prices sank at the start of the week, after a meeting by major exporters in Qatar collapsed without an agreement to freeze output. Tensions between Saudi Arabia and Iran were blamed for the failure, which revived industry fears that major government-controlled producers will increase their battle for market share by offering ever-steeper discounts.
Sunday's meeting in Qatar's capital Doha had been expected to finalize a deal to freeze output at January levels until October 2016 in an attempt to slow ballooning oversupply.
But the agreement fell apart after top exporter Saudi Arabia demanded that Iran, which was not represented, should also sign up. The Sunni Muslim kingdom of Saudi Arabia and Shia Islamic republic of Iran compete for influence in the Middle East, where they are currently fighting proxy wars in Syria and Yemen. As a result of the failure at Doha, BMI's Lee said Brent would fall below $40 per barrel again, although he added that he did not expect prices to re-test this year's 13-year lows of just over US$27 a barrel as private, non-OPEC producers, especially in the United States where drillers are suffering from low prices, are seeing their output fall.