Global benchmark Brent crude is down almost 4% today, falling again to discount against WTI as supply glut refuses to abate. North American benchmark WTI is down 2.5%. Brent has hit fresh 11 year low, surpassing 2009 crisis ear low.

It is just as we suggested in our post on Monday, "Oil up as Saudi Arabia severs tie with Iran", available at http://www.econotimes.com/Oil-up-as-Saudi-Arabia-severs-tie-with-Iran-137313#gs , gains on Middle East tensions unlikely to sustain as rivalry between Saudi Arabia and Iran would mean more crude oil in the market.

Today Iran suggested, those gulf countries that increased production in response to absence of Iran in the oil market due to western sanctions, should cut production. Iran is likely to boost oil production by half a million barrel/day by end 2016 as western sanctions are expected to be removed.

Saudi-Iran rivalry also means OPEC, which was left without a ceiling remains dysfunctional and any production cut except for technical reasons unlikely.

Going ahead in 2016, rivalry in Middle East, which got already separated in Saudi and Iran camp would remain a key macro-economic theme.

Key question in everyone's mind is how low can it go? Apparently a lot more (at least in terms of percentage), if supplies remain abundant.

Brent is currently trading at $35.1/barrel.