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Asian Markets Continue to Fall on Oil Glut Concerns

  • VOA News

A man walks by an electronic stock board of a securities firm in Tokyo, Jan. 18, 2016. Asian shares skidded lower Monday, following another dismal day on Wall Street, as investors looked ahead to Chinese economic growth figures.

A man walks by an electronic stock board of a securities firm in Tokyo, Jan. 18, 2016. Asian shares skidded lower Monday, following another dismal day on Wall Street, as investors looked ahead to Chinese economic growth figures.

Asia's key Hang Seng index fell 1.5 percent Monday, closing the day at its lowest point in more than three years.

Investors in the Hong Kong market responded to oil prices dropping to their lowest since 2003 on Monday, and deep market losses in the United States on Friday.

The price of a barrel of crude fell below $28 at one point Monday after sanctions were dropped against OPEC member Iran. Tehran can now export crude in a market already experiencing an oil glut.

Other Asian markets also showed losses, led by Tokyo's key Nikkei index dropping 1.1 percent.

Supply and demand

Vandana Hari, Asia editorial director of the London-based Platts energy information company, told VOA the prospect of another 500,000 to 1 million barrels a day of supply from Iran will only add to this year’s oversupply of crude oil.

Hari also said efforts to bring greater balance between supply and demand have been hampered by the decision of the Organization of Petroleum Exporting Countries (OPEC) to give up its traditional role of stabilizing the market. She says that has been aggravated by tensions between the oil cartel and Iran.

She said she expects the long-expected drop in U.S. oil production has not happened because energy producers have found new efficiencies and that has surprised the market.

However, Hari says, as oil approaches $20 a barrel, analysts widely believe that will be an inflection point at which prices will go back up.

Victor Beattie contributed to this report.

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