Oil prices tumbled below $100 today for the first time in nearly six months as investors digested the latest financial crisis.
Light, sweet crude traded on the New York Mercantile Exchange - the world's benchmark crude price - fell more than $4 to $97 a barrel before rising back less than a dollar. The last time the price was below $100 was 2 April.
In London, October Brent crude also fell nearly $2 to $95.73 a barrel on the ICE Futures exchange.
The falls come in the wake of the collapse of US investment bank Lehman Brothers, which has rocked markets around the world, and reports that put damage from Hurricane Ike as less than feared.
Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore, said: "Now that Ike has come and gone, initial reports indicate no real damage to the oil infrastructure in the Gulf coast area."
Federal officials said yesterday that the storm destroyed at least 10 oil and gas platforms and damaged pipelines in the Gulf of Mexico - only a small amount of the 3,800 production platforms in the Gulf. Three years ago, back-to-back hurricanes knocked out more than 100 platforms.
The price falls come despite last week's agreement from oil cartel Opec to cut back excess production. That saw a brief spike for prices to the $104 a barrel mark, but they have since fallen back.
Oil prices have fallen nearly a third from the $147 high seen in July as projections of slower global economic growth have dampened demand.
Mr Shum said: "Market sentiment is decidedly bearish, with all these concerns about developed countries going into recession or a serious slowdown impacting oil demand."
Petrol prices on UK forecourts have not fallen as quickly as oil, with average unleaded petrol down from July's peak of 119.7p to 112.8p at the weekend - a drop of nearly 6 per cent. Average diesel prices have fallen from 133.3p to 124.2p, just under 7 per cent.
The AA said it takes around four to six weeks for oil price changes to filter through to forecourt pumps.Reuse content