Oil Prices Plunge As Production Climbs

Global oil prices continued to drop further setting off a scramble on world markets. Prices fell below four-year lows to wind up at $81.84 a barrel for the benchmark grade, West Texas Intermediate. Since June, oil prices have tumbled more than 23 percent as a tidal wave of revenue has shifted with plunging prices.

The plunge in prices accelerated last week after the International Energy Agency reduced its forecast for global oil consumption, citing stagnant economies in Europe and slow growth in China and slower than expected growth in energy consumption in other emerging markets.

Meanwhile, OPEC production has climbed to a 13-month high, bolstered by a recovery in Libya and higher Iraqi output. About $200 billion that would have flowed into the coffers of the Organization of the Petroleum Exporting Countries has instead remained in the hands of consumers in oil-importing nations, including the United States, India, China and members of the European Union.

Lower prices have also pushed the budgets of Saudi Arabia, Russia, Libya and Iraq into the red and deepened budget deficits in oil-exporting nations of Nigeria, Venezuela and Iran.