Oil prices sink on Dubai concern

27 November 2009

Crude oil prices fell sharply during trading this morning (November 27th) as risk aversion swept stocks, commodities and currency markets after the announcement that Dubai World is struggling to pay its debts.

The company, a state-managed property investment vehicle, was revealed to owe $59 billion (£36 billion) to foreign creditors, with Abu Dhabi Commercial Bank said to hold the largest single liability. The two parties are now in negotiations over a potential repayment freeze.

In electronic trading on the New York Mercantile Exchange (Nymex), crude oil prices hit a six-week low, while wholesale heating oil prices also sunk.

Toby Hassall, research analyst with CWA Global Markets Pty in Sydney, told Bloomberg: "There seems to be anxiety across the markets, commodities and equities, stemming from concerns over Dubai's possible default on debt. The markets are weighing up the implications of that on the global economic recovery."

Oil prices are likely to move sharply once more on Monday when the US markets open after a two-day Thanksgiving trading break.

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