Oil prices fell to multi-month lows on Friday as global supply increased and investors worried about the impact on fuel demand of lower economic growth and trade disputes. Benchmark Brent crude fell below $70 a barrel for the first time since early April, down more than 18 per cent since reaching four-year highs at the beginning of October. Brent fell 95 cents to a low of $69.70 before recovering slightly to trade around $69.85 in intraday trade, down 4 per cent for the week and more than 15 per cent this quarter.
US light crude fell to an eight-month low below $60 a barrel, hitting a trough of $59.78, down 89 cents and off more than 20 per cent since early October. That puts the US contract officially in "bear market" territory, borrowing a definition commonly used in stock markets.
"There is no slowing down the bear train," said Stephen Brennock, analyst at London brokerage PVM Oil. "Instead, the energy complex has extended a rout driven by swelling global supplies and a softening demand outlook."
Oil peaked in October on concerns that US sanctions on Iran that came into force this week would deprive the oil market of substantial volumes of crude, draining inventories and bringing shortages in some regions.
But other big producers, such as Saudi Arabia, Russia and shale companies in the United States, have increased output steadily, more than compensating for lost Iranian barrels.
The United States, Russia and Saudi Arabia are pumping at or near record highs, producing more than 33 million barrels per day (bpd), a third of the world's oil.
The US sanctions, meanwhile, are unlikely to cut supply as much as expected. Washington has granted exemptions to Iran's biggest buyers, allowing them to buy limited amounts of oil for at least another six months.
China National Petroleum Corp said it was still taking oil from Iranian fields in which it has stakes.
Washington has said it wants to force Iranian oil exports down to zero, but Bernstein Energy now expects "Iranian exports will average 1.4 million to 1.5 million bpd" during the exemption period, about half the volume in mid-2018.
"As OPEC exports continue to rise, inventories continue to build, which is putting downward pressure on oil prices," Bernstein said. "A slowdown in the global economy remains the key downside risk to oil."
A glut in the refining sector, where a wave of unsold gasoline has pulled profit margins into negative territory, may also lead to a slowdown in new crude orders as refiners scale back operations.