Oil prices plunge, pull Canadian loonie
January 6, 2016, 4:45 pm

Fears that the Iran-Saudi crisis could divide OPEC and prevent consensus on curbing output helped drive oil prices lower [Xinhua]

International benchmark Brent Crude fell 5.1 per cent below to $34.69 for the first time in more than ten years in London trading on Wednesday on news of rising US stockpiles and waning demand from the world’s largest importer, China.

US benchmark West Texas Intermediate crude fell to $34.30 near its December lows.

The ongoing crisis between major OPEC exporters Iran and Saudi Arabia – while traditionally should boost oil prices on supply fears – threatens any consensus to curb production within the oil cartel.

Iran is also expected to export a further one million barrels a day once sanctions are removed. It may now increase that number.

But it isn’t only oil exporting countries such as OPEC and emerging markets such as Venezuela and Russia that are feeling the pinch of dropping oil prices.

The Canadian dollar, or loonie, on Wednesday lost 0.55 cents to the US greenback on fears that the oil market has not bottomed out yet and was trading below 71 cents (or 1.41 to the dollar) for the first time in nearly 13 years.

One of Canada’s biggest exports is oil from the west of the country. According to the International Monetary Fund’s World Economic Outlook Database, Canada’s oil exports accounted for more than $128 billion in 2014, roughly 27 per cent of total exports.

At press time, the drop in the loonie had pulled Canada’s TSX down 0.94 per cent.

The TSX is trading about 10 per cent lower than on January 7, 2015.

Some experts in Canadian media have warned that the Canadian dollar could lose more ground as low oil prices persist.

On Tuesday, the Bank of Montreal warned that the loonie could drop further to below 70 cents against the greenback before it gains strength again.

The BRICS Post with inputs from Agencies