Oil slid from the highest level in three weeks, snapping the longest run of gains since April as Iran repeated its goal of boosting exports after sanctions on the country are lifted.
Futures in New York lost as much as 1.3 percent, after climbing 9.7 percent last week. Iran’s priority is to boost crude shipments to pre-sanction levels, state-backed IRNA reported, citing Oil Minister Bijan Namdar Zanganeh. The Persian Gulf nation plans to add 500,000 barrels a day of exports within a week after sanctions are removed, said Rokneddin Javadi, head of National Iranian Oil Co., according to Shana news agency.
The global glut that’s sent West Texas Intermediate crude toward its second yearly decline may deepen after the Organization of Petroleum Exporting Countries effectively abandoned output limits earlier this month. Brent, the benchmark for more than half the world’s oil, is poised to end 2015 with the lowest annual average price in 11 years, hurting oil- exporting countries and companies.
“If Iran adds as much as it plans to the already oversupplied market, there is definitely less hope for the market in the first half of next year,” said Hong Sung Ki, senior commodities analyst at Samsung Futures Inc., said by phone from Seoul. The country’s export ambitions “will become a driver for lower prices,” he said.
WTI for February delivery lost as much as 49 cents to $37.61 a barrel on the New York Mercantile Exchange and was at $37.64 by 4 p.m. in Singapore, falling for the first time in five days. Prices rose 60 cents, or 1.6 percent, to $38.10 on Thursday, the highest since Dec. 4. Trading was closed Friday for the Christmas holiday. The volume of all futures traded was 40 percent below the 100-day average.
Brent for February settlement lost 29 cents, or 0.8 percent, to $37.60 a barrel on the London-based ICE Futures Europe exchange. Prices are down 16 percent this month, the biggest drop since July. The European benchmark crude traded at a 4-cent discount to WTI.
Iran sees potential for a further drop in crude prices as the nation plans to boost its supplies amid lack of OPEC cooperation, said Javadi, who is also the country’s deputy oil minister. The Middle East producer has reached agreements with buyers and plans to increase overseas shipments by 1 million barrels a day within six months of sanctions lifting.
The 13-member OPEC, which controls about 40 per cent of global oil production, abandoned its formal output target in its Dec. 4 meeting as it attempts to drive higher-cost producers from the market. That is adding to the glut that is also hurting its own members. Saudi Arabia is said to be considering selling stakes in state-owned companies to help stem a budget deficit that reached 20 per cent of its economy.