Just when it looked like the price of oil couldn't drop even further, it just keeps barreling down.

Crude closed at the lowest level in more than six years Tuesday on news from China and the Middle East.

The PBOC weakened its Yuan FIX dramatically for the 2nd consecutive day (from 6.1162 Monday to 6.2298 last night to 6.3306) sending Chinese stocks lower and extending yesterday's losses, bolstering concern that the world's second-biggest economy will slow.

The currency continued its plunge Wednesday, falling another 1.6 percent following Tuesday's 1.8 percent drop. The PBOC has said it was aiming for a devaluation of around 2 percent but added that there was no reason for a continued yuan depreciation, citing “ample forex reserves” and a “stable financial system” as supportive factors of exchange rate stability.

Immediate Drop in Oil Price

The Chinese move had an immediate effect on oil prices as the weaker yuan will increase import costs and limit demand for the crude.

Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees $128 billion of assets said that, “The Chinese news just adds to concerns we already had. Nobody is excited about the prospects for demand growth and excess supply isn't going away. Prices will probably drop below $40 before this is over.”

At the same time, oil reserves out of OPEC countries are continuing to flow undeterred causing a glut in the black gold and putting additional pressure on oil prices. According to OPEC data, Iran already increased output by 32,300 barrels a day in July to 2.86 million a day, the highest since June 2012.

WTI for September delivery fell $1.88 to $43.08 a barrel on the New York Mercantile Exchange, the lowest settlement since March 2009.