Oil fell below $35 a barrel in New York for the first time since 2009 as Iran reiterated its pledge to boost crude exports, bolstering speculation Opec members will exacerbate the global oversupply.
Futures fell 1.8 per cent to $34.99 a barrel in New York, the lowest since February 19, 2009. Crude lost almost 11 per cent last week, the biggest drop in a year. There’s “absolutely no chance” Iran will delay its plan to increase shipments even as prices decline, said Amir Hossein Zamaninia, the nation’s deputy oil minister for international and commerce affairs.
Oil slumped last week to levels last seen during the global financial crisis, while speculators increased bets on falling US crude prices to an all-time high after the Organisation of Petroleum Exporting Countries (Opec) effectively abandoned production limits. The supply glut will persist at least until late 2016 as demand growth slows and Opec shows “renewed determination” to maximise output, according to the International Energy Agency (IEA).
“Gloom nourishes gloom,” said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. “The market is fully acknowledging that OPEC is no longer in price-control mode or providing a floor, and that the group is unlikely to change that strategy any time soon.”
Iran, which expects international sanctions over its nuclear programme to be lifted by the first week of January, has already secured customers for its planned supply expansion, Zamaninia said in an interview in Tehran. The government is also preparing to offer oil and natural gas contracts to investors. The country pumped 2.8 million barrels a day last month, data compiled by Bloomberg show.
Opec, which set aside its output quota at a December 4 meeting, is displaying hardened resolve to maintain sales, the IEA said in its monthly report Friday. While the group’s strategy has affected other producers, triggering the steepest fall in non-Opec supply since 1992, world oil inventories will probably swell further once Iran restores exports, predicted the Paris- based energy adviser to developed economies.
World powers said they persuaded some of Libya’s feuding factions to form a new government of national unity and act against Islamic State. Libyan representatives at a peace conference in Rome on Sunday pledged to sign a UN-brokered deal Wednesday that would be “the only legitimate basis for a solution” to the country’s crisis, said US Secretary of State John Kerry. The OPEC member’s oil production has shrunk to about 375,000 barrels a day from 1.6 million a day before the 2011 rebellion that toppled Muammar Qaddafi.