Oil prices briefly dropped below US$30 a barrel on Tuesday night and threaten to hit historic new lows in the days ahead, raising the spectre of pain for some countries and bankruptcy for companies.
The United States West Texas Intermediate (WTI) benchmark fell under US$30 for the first time in over 12 years before bouncing back up to just slightly above that level.
The dip into the US$20 region came just hours after British oil giant BP said it would cut an additional 4,000 jobs globally, or about 5 per cent of its total workforce of 80,000.
BP is in solid, if miserable, company. Brazilian oil major Petrobras also said yesterday that it was slashing its five-year spending plan, from US$130 billion (S$186 billion) to US$98.4 billion, while Malaysia's Petronas warned on Tuesday that it faces several tough years ahead.
Although oil prices eventually recovered ground and bounced back above US$30 last night, the dire warnings issued by Citigroup last year that the world could see US$20 oil now seem more realistic than ever. The bank's head of commodities research, Mr Ed Morse, wrote last February that crude could fall ''perhaps as low as the US$20 range for a while''.
The price slump has been unprecedented. Oil was still selling above US$100 a barrel just 16 months ago. Prices slipped below US$40 a little over a month ago, before dropping to around US$30 yesterday.
Mr Morse was ignored when he first made his forecast but is no longer a lone renegade. Goldman Sachs and Morgan Stanley are among the research houses that have predicted oil will drop to US$20.
Indeed, the price slump has been unprecedented. Oil was still selling above US$100 a barrel just 16 months ago. Prices slipped below US$40 a little over a month ago, before dropping to around US$30 yesterday.
The impact of the decline and a continued slide will be far-reaching and devastating to many.
A Deutsche Bank report last July showed that most oil-producing countries, including Russia, Saudi Arabia and Iran, need crude prices of at least US$80 just to break even.
As many as a third of US oil-and-gas producers could tip towards bankruptcy and restructuring by the middle of next year, according to Wolfe Research.
Closer to home, Malaysia, which is looking to revise its Budget estimates as Petronas says it is contributing less, has estimated it could lose RM300 million (S$98 million) for every US$1 drop in oil prices.
For Singapore, as a net oil importer, lower prices have contributed to smaller utility bills, a fall in petrol prices and a drop in inflation.
On the business front, as an oil trading hub in Asia and one of the world's top three export refining centres, the impact of falling prices is mixed. The low oil price helps refineries on Jurong Island where the cheap feedstock has helped to boost margins. Exports of chemicals were the one bright spot for manufacturing last year, while analysts said that the chemical industry probably enjoyed their highest profits in a decade.
But the slump has already resulted in at least one high-profile casualty - Jurong Aromatics Corp, which ran a $2.4 billion facility in Jurong Island, has gone into receivership.
Oil's weakness is also threatening to have a big impact on Singapore's shipyards. Already, rigbuilders are seeing far fewer contracts. Now, analysts have warned that a potential bankruptcy at Sete Brasil, a major client of Keppel's offshore and marine unit and Sembcorp Marine, could have dire financial consequences for the two rigbuilders.
In fact, neither of them has been paid by Sete Brasil since November 2014 after the company failed to secure long-term financing amid allegations of kickbacks involving Petrobras.