Oil price drops below USD 40 first time in seven years

The price of crude oil has dropped below USD 40 per barrel for the first time in last seven years, which confirms expectations that oversaturation of the global market will continue.

A barrel of oil in the global market is now 2.1% cheaper, costing USD 39.88, which is a record low since 20 February 2009.

After the members of the Organization of the Petroleum Exporting Countries (OPEC) made a decision last year not to reduce production, the price has dropped 40%.

This decision was made under the influence of Saudi Arabia, and OPEC members in that way chose to suppress the companies with big production costs.

Also, OPEC members failed to reach agreement last week on a limit to production, while Iran and Iraq announced the boost of both production and exports in 2016.

The global oil market is already oversaturated because daily production exceeds consumption needs by nearly two million barrels.