The Indian basket comprising 73 percent sour-grade Dubai and Oman crude, and the balance in sweet-grade Brent fell to its lowest of $42.59 on Tuesday, since December 2008 when the prices averaged $40.61 for the month, as per government data. OPEC'S biggest member-economy Saudi Arabia is being considered key in the the slump in crude oil prices, for not cutting crude output in line with its long-term strategy of making production unviable for US explorers. In July, the OPEC crude production increased by 101,000 barrels per day to average 31.51 million barrels per day, according to OPEC's monthly oil market report last week. Particularly since global powers signedia the historic nuclear deal with Iran last month, traders have been worried that crude supply might exceed the demand.
Oil prices have been under pressure for several months due to concerns over oversupply, but the slump has deepened in recent weeks fueled by fears of a sharp slowdown in the Chinese economy. The fall in oil followed an 8.5 percent decline in the Shanghai Composite Index on Monday. China is the world's second-largest consumer of oil after the US. Analysts predictions of the price falling to as low as $20 have provoked fears about what the flip side of the situation could entail. Saudi Arabia, which draws some 90 percent of its revenue from petroleum, is reportedly preparing to cut billions of dollars from its investment budget.
