Oil prices drop to lowest level in a year amid increased US and Russian output

Oil prices dropped sharply this morning to their lowest point in over a year as US output looks set to reach 8m barrels per day by the end of 2018.

International standard Brent crude fell off a cliff at around 9am UK time, plummeting around four per cent to $57.27 per barrel. However it later regained some ground, and was trading down 2.6 per cent at $58.12 at around 11am.

Prices were pushed lower as production reached near record highs in the US and Saudi Arabia, while Russian output has been at its highest ever levels in December.

Oil producers cartel Opec and its allies, known as Opec+, agreed to cut production by 1.2m barrels per day earlier this month in a bid to stabilise prices at around $60 per barrel.

However, the cuts are not due to come into effect until the new year.

“Rising US shale production levels along with a deceleration in global economic growth have threatened to offset Opec+ efforts,” said Benjamin Lu Jiaxuan, at Singapore-based brokerage Phillip Futures.

“Market confidence remains extremely delicate.”