Oil prices hit their lowest in over 11 years on Wednesday, as the row between Saudi Arabia and Iran was seen making any cooperation between major exporters to cut output even more unlikely.

Evidence of slowing economic growth in China and India has fueled fears that even strong demand elsewhere may not be enough to mop up the excess crude that has resulted from near-record production over the last year.

The Saudi-Iranian tension has stripped nearly 8 percent off the price of oil in the last three trading days alone and has killed speculation that OPEC members might agree on production cuts to lift prices.

“There are rising stockpiles and the tension between Iran and Saudi Arabia make any deal on production unlikely,” said Michael Hewson, head of strategy at CMC Markets.

Benchmark Brent crude futures were at $35.07 a barrel at 1120 GMT, down $1.35 on the day, and at their lowest since early July 2004, having staged their largest one-day drop in percentage terms in nearly five weeks.

“I think we’ll see a price war soon to keep market share,” said Tariq Zahir, an analyst at Tyche Capital Advisors. “Prices will get lower and I think we’ll hit $32 again.”

Global Brent crude benchmarks hit $34.93 a barrel on Wednesday, down 1.5 percent from the day before and the lowest since 2004.

Businessman Jim Rogers sees the steep downward trend in oil prices as reflective of severe financial problems in the global economy that began almost a decade ago with the US financial crisis.

“We’re going to pay for the prices of the excesses of the past 8 or 10 years and everything is going to go down more than it should. Whenever you have something go down, it usually overshoots to the down side; just like when things go up they go up too much,” Rogers told.

The American investor warned that any panic in the market could drive oil prices down to new low records.

“Some people are saying 20 dollars [a barrel]; I don’t know; that’s not my prediction. I’m just saying ‘be prepared’ if things will go – at least for a short time – lower than anybody could conceive.”

Here are a few reasons why oil is cratering, according to this report:

1) Saudi Arabia and Iran go head-to-head

The oil market initially rallied on Monday following news that Saudi Arabia had severed diplomatic ties with Iran. That climb was based on expectations that the conflict between the two big oil producers may disrupt production in the region. But oil prices finished lower Monday as traders began to realize that the tensions would complicate any moves toward cooperation to draw down the glut of global crude supplies.

2) China slows down and global stock markets drop

Supplies may also continue to swell if oil demand slows—and a rout in global stock markets and recent economic data from China, which is the world’s largest crude importer, imply that it could. China reported that its manufacturing sector index fell last month, while a private gauge has shown that the country’s service activity grew at a slower pace in December.

3) More than meets the eye as U.S. oil supply drops

Sentiment in the oil market is so bearish that a drop in U.S. crude inventories wasn’t enough to help prices rebound even a little, especially after a closer look at the data. On Wednesday, the U.S. Energy Information Administration said crude supplies fell 5.1 million barrels for the week ended Jan. 1. A drop of that size usually has the power to send prices climbing, but analysts said the big decline was due to year-end “destocking” of crude inventories as companies seek out tax breaks.

“The decline in inventories is a positive for the market, but this is being more than offset by the continued increase in production,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.