Stock market fears as crude oil price hits a 12-year low

EXPERTS yesterday warned of a global economic slowdown as the price of crude oil crashed to a 12-year low.

It now costs below $31 a barrel for the first time since 2004.

But banking group Standard Chartered said it could even reach $10 a barrel – a level not seen since 1998.

As analysts warned of a ‘cataclysmic year’ ahead for investors and the global economy, BP said it would have to slash 4,000 posts around the world including 600 in the North Sea.

A Royal Bank of Scotland analyst also warned that stock markets could fall 20 per cent this year following turbulence in China and warned investors to ‘sell mostly everything’.

Some experts say an oil price of $10 a barrel could lead to fuel as low as 86p per litre on British forecourts as well as falling energy bills for families and businesses in a welcome boost for the economy.

But it would be a devastating blow for the North Sea oil industry already reeling from the slump in prices over the past 18 months. Oil is down nearly 75 per cent since trading above $115 in mid2014. Six months ago it dropped to $56.8 a barrel, before falling below $40 in December, leading to fuel at about £1 a litre.

Deirdre Michie, of industry lobby group Oil & Gas UK, said: ‘The plummeting oil price has impacted heavily on activity. Companies are having to take very difficult decisions in what continues to be a challenging time.’ The RAC said the fall in the price of oil should lead to even cheaper petrol prices. Spokesman Simon Williams said: ‘This latest prediction of oil hitting just $10 a barrel would have the potential to take petrol prices down to around 86p per litre – the last time we saw average prices this low was in early 2009.’

The slump in oil prices has coincided with turmoil on global financial markets as the slowdown in China and higher interest rates in the US knock fragile confidence. RBS warned that it could be a punishing setback for savers with pensions and other investments tied up in shares. A 20 per cent fall in stock markets would wipe more than £300billion off the value of Britain’s biggest companies.

In a gloomy report, RBS analyst Andrew Roberts said. ‘Equities have become very dangerous. Watch out. Sell mostly everything… The game is up. The world is in trouble.’

In its note to clients, the bank warned that ‘this all looks similar to 2008’ when the collapse of US banking giant Lehman Brothers triggered the global financial crisis. Mr Roberts advised investors to switch their money out of risky assets such as shares and into the safety of bonds.

Warning of a ‘ cataclysmic year’, he said global growth, trade and lending was slowing and the world faces a dangerous bout of deflation.

George Osborne last week warned that the UK faces ‘a dangerous cocktail of new threats’ from around the world.

The FTSE 100 index suffered its worst ever start to a year as the rout in China sent shares around the world tumbling.

It remains five per cent down after just seven days of trading – wiping more than £80billion off the value of Britain’s biggest companies.

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‘Sell mostly everything’