Oil prices sink below $29 after lifting of Iran sanctions

Oil prices sank further below $28 on Monday morning, on fears that the lifting of sanctions on Iran will push more supply onto a global market already grappling with overcapacity.

Brent crude, the international oil benchmark, shed as much as 4.3 per cent in Asian trading to $27.70 a barrel, the lowest since November 2003. That followed a 6.7 per cent slump on Friday in New York and a decline of 13.7 per cent for the whole of last week.

West Texas Intermediate, the US benchmark, was down 1.5 per cent in Asia at $28.99.

The slide in oil prices pulled Asian equities lower, sending the Japanese stock market briefly into bear territory. In morning trade Japan’s Nikkei was 1.9 per cent lower while Australia’s S&P/ASX 200 was down 1 per cent. At their intra-day lows, Japan’s benchmark briefly entered a bear market from its June high last year, while the Australian market’s decline since a multi-year April peak was a fraction away from hitting 20 per cent.

In currency markets, things were a bit calmer on Monday.

The dollar index, a measure of the US currency versus a basket of global peers, was flat on Monday at 98.988, but slipped 0.1 per cent on Friday. The greenback gained 9.3 per cent in 2015 and is up 0.4 per cent this year.
The Australian dollar was up 0.5 per cent at $0.6896, with the burst after the renminbi fix seeing it pare declines and swing to be the best performing currency in Asia. The Taiwanese dollar and Thai baht, both up 0.2 per cent, were next best.

The Japanese yen surrendered early gains this morning and swung to be 0.2 per cent weaker at Y117.26, making it among the worst-performing Asian currencies. In recent weeks, the yen has been a strong performer as markets become increasingly jittery. The currency hit a fresh one-year high of Y116.51 per dollar on Friday.

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