Brent Crude futures for February delivery on London's International Petroleum Exchange opened after the Christmas break at dollars 13.25 a barrel, the lowest since November 1988.
But in real terms, stripping out inflation, the price of Brent crude is the lowest since 1973. Adjusted to 1980 prices, the average oil price in real terms in 1973 was dollars 6.70 a barrel, while the current price is equivalent to dollars 7.75.
The decline this year from an actual dollars 20 a barrel stems from sluggish demand from recession-affected importing countries, and increased output by many producing countries.
Oil analysts say that Saudi Arabia is refusing to lead a new round of output cuts by the Organisation of Petroleum Exporting Countries. But other Opec oil ministers blame low prices on increased North Sea production, which has reached a record 5 million barrels a day.
Oman's oil minister, Said bin Ahmed al-Shanfari, ended talks in Britain and Norway on Tuesday without pledges by either country to restrain North Sea sales.
Tim Eggar, the UK Energy Minister, told Mr Shanfari that decisions on output rested with the oil companies and not with the government.
Britain's oil output rose by 2 per cent in November to 2.3 million barrels a day, according to Royal Bank of Scotland.
Lindsay Horne, an executive director of Lehman Brothers, said: 'The market is feeling that prices are a one-way bet and that there's no point in waiting until the new year to sell.' He expects prices to fall to dollars 11.50 shortly after trading begins in the new year, but believes that low oil prices are 'wonderful news for the world economy'.
IPE February Brent crude recovered from a low of dollars 13.23, down by about 40 cents, to dollars 13.41 in late trading, aided by weather-affected higher US energy prices.Reuse content