U.S. light crude closed down $2.21, or 5.5 percent, at $38.24 a barrel, which was the lowest since February 2009. Steep losses last week capped the contract’s longest weekly losing streak since 1986.
Brent crude was trading down $2.70, or about 6 percent, at $42.80 a barrel, after hitting a session low of $42.51, its weakest since March 11, 2009.
Chinese stock markets suffered their biggest one-day drop since the financial crisis, stirring huge sell-offs in global equities and commodities, with more than 400 billion euros ($465 billion) wiped off FTSEurofirst 300 index.
“Today’s falls are not about oil market fundamentals. It’s all about China,” Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt, told Reuters Global Oil Forum. “The fear is of a hard landing and that things get out of the control of the Chinese authorities.”
U.S. crude is now nearly 18 percent below its opening price at the start of the month and Brent is down about 16 percent.
Multi-year lows in oil prices have so far failed to trigger action from the world’s top producers to rein in output, though Iranian Oil Minister Bijan Zanganeh said on Sunday that holding an emergency OPEC meeting could be effective in stabilizing prices, Iran’s oil ministry news agency Shana reported.
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There was a similar call by Algeria earlier this month, but other OPEC delegates said no meeting was planned.
Zanganeh also said Iran would defend its oil market share by ramping up production at any cost and as soon as possible.
“We will be raising our oil production at any cost and we have no other alternative,” Zanganeh said. “If Iran’s oil production hike is not done promptly, we will be losing our market share permanently.”
Oil market speculators have raised their bets on a rebound in Brent prices. InterContinental Exchange data showed they had increased net long positions after four weeks of net sales.
In a sign that relations between Iran and Western powers are improving, Britain reopened its Tehran embassy on Sunday.
Several oil and gas companies, including representative from Shell, traveled to Iran with foreign minister Philip Hammond.
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