It is certainly not cheering news for oil exporters such as Nigeria as Brent crude oil prices extended a steep slide on Wednesday on the back of worries about weakening world demand and oversupply.
Brent crude, the type that Nigeria majorly exports was down 0.35 percent at $65.24 per barrel.
Brent crude price had tanked 6.8 percent on Tuesday and set an eight-month trough of $64.61.
U.S. West Texas Intermediate (WTI) crude futures dived 7 percent the previous day, suffering their biggest one-day loss in more than three years. The contracts last stood at $55.30 per barrel CLc1 for a loss of 0.7 percent, following a descent to a one-year low of $54.75 overnight.
Brent had soared to a four-year high of $86.74 early in October as the market braced for U.S. sanctions on Iran, but prices have sunk roughly 25 percent since then.
Concerns about global growth pushed MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.5 percent.
Hong Kong’s Hang Seng .HSI dropped 0.55 percent and the Shanghai Composite Index .SSEC retreated 0.9 percent.
Australian stocks fell 1.75 percent, South Korea’s KOSPI lost 0.3 percent and Japan’s Nikkei rose 0.16 percent.
Spreadbetters expected European stocks to open lower, with Britain’s FTSE losing 0.4 percent, Germany’s DAX slipping 0.3 percent and France’s CAC shedding 0.5 percent.
The Dow and S&P 500 ended slightly lower on Tuesday as lower oil prices took a toll on energy shares, offsetting a small gain in technology stocks and renewed hopes for progress in U.S.-China trade talks.
“While the plunge in WTI will no doubt act as a relief for emerging markets and the global consumer, U.S. real rates continue to climb, underwriting the dollar’s strength,” wrote Sean Darby, chief global equity strategist at Jefferies.
“The competition for capital is coinciding with a sharp slowdown in China and emerging markets, putting pressure on 2019 earnings.”
Riskier assets have come under strong selling pressure over the past two months as worries about a peak in earnings growth added to international trade tensions and signs of slowing in global investment and growth.
The oil plunge underlined cracks in the global economy. In Japan, data confirmed the world’s third-largest economy contracted in the third quarter, adding to growing signs of weakness globally, with China and Europe losing momentum. Germany is expected to report later in the day that its economy also shrank last quarter.
“The markets would have reacted more positively to U.S.-China trade and Brexit-related headlines a few months ago,” said Makoto Noji, chief currency and foreign bond strategist at SMBC Nikko Securities in Tokyo.
“But currently there is more focus on the possibility of both the U.S. and Chinese leaders maintaining their tough stance, with a compromise eluding them, and Brexit bogging down. Market sentiment is clearly cooling down.”
The United Kingdom and European Union agreed on the text for a Brexit divorce deal on Tuesday. Prime Minister Theresa May will present the draft withdrawal agreement to her senior ministers on Wednesday for discussion and then decide on the next steps.