Oil prices keep plummeting as OPEC starts price war

International oil prices have been dropping sharply over the past three months — a huge energy story with major repercussions for dozens of countries, from the United States to Russia to Iran.

But on Friday, prices went into serious free-fall as the 12 Opec members decided to maintain production at 30 million barrels per day, as first agreed in December 2011.

Brent crude fell $2.43 to $70.15 a barrel on Friday. The last time Brent crude was priced this low was May 2010.

U.S. crude settled down $7.54 at $66.15 a barrel.

The price of Brent dived by more than $5 a barrel on Thursday after Opec announced no change to its production plans following a meeting in Vienna.

This marks a big shift in global oil politics. Essentially, OPEC is now engaged in a price war with oil producers in the United States. The cartel will let prices keep falling in the hopes that many of the newest drilling projects in the US will prove unprofitable and shut down.

This is a risky stand-off for OPEC, as many of its member countries require high oil prices to balance their budgets. Iran, for one, is facing a real pinch. It's also a sign that OPEC's influence over global oil markets may be waning.

Several members of Opec had pushed for a cut in production to boost the price.

But Saudi Arabia, the largest producer within the oil cartel, favoured maintaining production at its current level.

Most members of the oil grouping require an oil price above $80 dollars a barrel to balance their budgets, but Saudi Arabia and some of the gulf states can sustain a lower oil price for a while thanks to state financial holdings and other diversified investments.

The price of Brent crude has now fallen by more than a third since June, with sluggish global demand and rising production from the US being blamed for the decline.

"Welcome to the new world of oil," said Michael Wittner, senior oil analyst at Societe Generale.

"Saudi Arabia and Opec will no longer be the mechanism to balance the market, they have relinquished that role.

"Instead, the market itself - prices, in other words - will be the mechanism to rebalance the market. We cannot overstate what a dramatic and fundamental change this is for the oil market."

Some analysts view Opec's decision as a tactic to keep prices below the level which makes extracting shale in the US economical.

"Opec is all in and will continue to flood the globe with oil in an effort to bury the US shale oil producer," said Phil Flynn, senior market analyst at the Price Futures Group.

The falling oil price continued to hit shares in energy stocks on Friday, with shares in oil giants BP, Royal Dutch Shell and Total all lower.

Shares in airline companies, however, rose on hopes that they will face lower fuel bills.