Oil prices fell to their lowest in nearly seven years on Monday after OPEC’s meeting ended in disagreement over production cuts and without a reference to its output ceiling, while a stronger dollar made it more expensive to hold crude positions.
The Organization of the Petroleum Exporting Countries (OPEC) ended its policy meeting on Friday without agreeing to lower production.
For the first time in decades, oil ministers dropped any reference to the group’s output ceiling, highlighting disagreement among members about how to accommodate Iranian barrels once Western sanctions are lifted.
“A stronger dollar and the aftershock of Friday’s OPEC meeting are weighing on the oil market,” said Tamas Varga, oil analyst at brokerage PVM Oil Associates in London.
Brent crude prices LCOc1, the globally traded benchmark, traded down 82 cents at $42.18 a barrel at 1334 GMT and touched a low of $42.11, the lowest since March 12, 2009. U.S. crude CLc1 was down $1.12 at $38.85 a barrel, a drop of nearly 3 percent.
The dollar .DXY was up against a basket of currencies.
Analysts at Barclays said the lack of an OPEC production target in its written announcement was a sign of discord.
“Past communiques have at least included statements to adhere, strictly adhere, or maintain output in line with the production target. This one glaringly did not,” they said.