It has been a brutal sell-off.
Two oil benchmarks, Brent Crude and West Texas Intermediate, dipped to prices that are 20 percent below what they were just a month ago.
Brent crude, the global benchmark, settled down 6 cents to $72.07 a barrel, bouncing off its post-EIA session low on support from earlier reports that Russian Federation and Saudi Arabia are discussing whether to cut crude output next year.
Output from the world's top-3 producers Russian Federation, the United States and Saudi Arabia, broke through 33 million bpd for the first time in October, meaning these three countries alone now meet more than a third of the nearly 100 million bpd of global consumption.
There are a number of reasons why oil has sold off as rapidly as it has. That revived concerns of a supply glut, in contrast to earlier fears over a crude crunch due to shrinking exports from the country.
Once the waivers expire after 180 days, new waivers are expected to be issued, with a source in China saying his country would likely receive another six months of exemptions, though at a lower rate of around 220,000 bpd. All other countries have been warned to stop importing Iranian oil at once or face US-imposed trade penalties; if the Greek merchant shipping industry continues to do business with Iran, Greece-based firms could find themselves barred from using American ports or trading with American companies.More news: Trump slaps down journalist for 'stupid' question
But Iran supply is expected to rise after November as waivers are used to start ordering more Iranian oil.
The second factor is that, thanks to the shale revolution, U.S. supplies are growing rapidly.
In the week ending November, the USA crude production hit a whopping 11.6 million bpd, according to Energy Information Administration (EIA) data released on Wednesday.
USA crude stockpiles have increased for seven consecutive weeks and those are likely to be added to. The previous daily record of 9.6 million bpd was touched in April 2018.
Crude futures are poised for their fifth straight week of losses as growing output from key producers and a deteriorating outlook for oil demand deepen a sell-off spurred by October's broader market sell-off.
However, oil markets were held back somewhat after the United States became the world's top crude producer as its output hit record levels.More news: Dez Bryant reacts after reportedly suffering season-ending injury in Saints practice
Russian Federation pumps an average of 10.8million bpd and Saudi Arabia, about 10.5million bpd. Tehran worries OPEC and non-OPEC countries such as Russian Federation will increase their production to fill the gap in response.
So the supply story is robust. The sanctions were announced in May, leading to peak prices in early October as the market was contemplating the impact about the potential diminished supplies. The International Monetary Fund forecasts that the sanctions will cause Iran's economy to contract 1.5 per cent this year and 3.6 per cent next year - pain that Trump has boasted about. He said the US has evidence that Iranian vessels are trying to evade USA sanctions by disabling location transponders used to prevent collisions.
The market is assuming that, in the short term, prices will carry on falling.
Front-month Brent crude oil futures were at $70.84 a barrel, 19 cents above their last close.
That may led to crude stockpiles, as has been seen in the United States, growing further. It makes the USA the world's biggest producer of crude. "I see them diversifying towards other markets, for instance, the Saudi one, now under pressure to increase its oil output". Overall exports have since fallen to 1.8 million bpd, according to energy consultancy Wood Mackenzie, which estimates volumes dropping to 1 million bpd.More news: Navy ship takes on water after Tsakos aframax collision