Concerns over continued oversupply of crude oil in the global market arising out of a tussle between OPEC and non-OPEC producers made matters more difficult on Monday, with Brent crude falling for the seventh consecutive session and trading close to an 11-year low.
Since December 2008, it is for the first time that Brent crude LCOc1 fell below $36.70 per barrel while US West Texas Intermediate (WTI) CLc1 plunged 2.5% to trade at $34.70 a barrel.
Any further fall from the current level would take Brent to its lowest since the mid-2004, reports Reuters.
It may be recalled that on 4 December, members of the Organisation of the Petroleum Exporting Countries (OPEC) failed to agree on the level at which to cap output at a time when a glut has already resulted in oil prices falling consistently.
"Oil is coming under pressure as the lack of OPEC cuts mean incessant oversupply continues," said Amrita Sen of Energy Aspects.
The scenario is set to worsen, with Iran's crude oil exports poised to reach a six-month high. The cost of production gives Iran enough legroom to sustain profitability even if prices stay at current levels or drop further.
Salbali Karimi, managing director of Iran's Central Oil Fields Company, was quoted as saying that "Iran's cost of production stood $1-1.5 per barrel".
Falling crude oil prices augur well for India, which imports about 80% of its crude oil requirement. The crude oil price for India was $35.72 per barrel on 11 December, lower than $36.65 per barrel on 10 December.
India's crude oil import bill was $112.74 billion last financial year.