Sharp drop in oil prices

Press, 25 January 1986, Page 21

Sharp drop in oil prices

PA New York Oil prices went into a tailspin yesterday after the Saudi Arabian Oil Minister, Ahmed Zakl Yamani, reportedly warned that prices could fall below SUSIS a barrel, a development he said would have dire consequences for the world’s economy. A grade known as Brent North Sea crude, which sold on the cash market late on Wednesday afternoon for $U520.05 a barrel, sold in London on Thursday for SUSIB.9O for delivery in February, and hit levels as low as 1U518.35 for delivery in March. West Texas intermediate, the benchmark US crude, opened at 5U518.75 a barrel for March delivery on the New York Mercantile Exchange, where it had closed at $U520.39 on Wednesday. In later trading, the price hovered around SUSI 9. In an interview, Yamani emphasised that Great Britain and other non-OPEC producing nations must reach an accord with the Organisation of Petroleum Exporting Countries to restrain production.

“Without a pricing agreement, there will be no limitation to the downward price spiral which may bring crude prices to less than SUSIS a barrel, with adverse and dangerous consequences for the whole world economy," Yamani was quoted as telling OPEC’s official news agency. The development came after the market had shown signs of settling at levels near SUS2O a barrel, after a week-long trading frenzy that had left prices for crude at their lowest levels in six years. The plunge in oil prices continued to weigh on the world’s financial markets. In New York, stock prices again tumbled as the Dow Jones average of 30 Industrials fell 12.16 to 1502.29 on Wednesday after losing 14.68 points on Tuesday.