09:39 | 08/01/2016 Global Economy
The London market was sharply lower after oil plummeted to its lowest price in 11 years amid mounting tensions in the Middle East.
Oil firms have seen their shares hit by falling prices (Photo: www.expressandstar.com)
The Brent Crude slumped by more than 2% to 34.83 US dollars a barrel at one point today, as diplomatic relations between Saudi Arabia and Iran continue to deteriorate.
Analysts predicted that political tension between Saudi Arabia and Iran would lead to surplus of oil supply as Iran would increase oil output after the removal of sanctions imposed by the West while Saudi Arabia rose productivity to keep the market share.
On Wednesday, Saudi Arabia reduced the crude oil price for February delivery in the context of surplus supply. The move took place as Iran, a member of the Organization of Petroleum Exporting Countries led by Saudi Arabia, is resuming petroleum exports to Europe after international sanctions were removed in accordance with a historic nuclear deal signed in the middle of 2015.
Meanwhile, Saudi Arabia reduced prices to petroleum exports to the US and Middle East but applied increased prices to exports to Asian market./.