Oil Extends Decline as Iran Calls Freeze Proposal `Ridiculous’

The price of Brent, the worldwide benchmark for crude oil, was down 2.2 percent at $32.53 per barrel while West Texas Intermediate slipped 2.8 percent to $30.97 after Organization of the Petroleum Exporting Countries (OPEC) heavy weight Saudi Arabia ruled out a production cut Tuesday.

Naimi’s words come after Iranian oil minister Bijan Namdar Zanganeh called a proposal by Saudi Arabia and Russian Federation to freeze oil production “ridiculous”.

According to CNN, al-Naimi said there is “no trust” between oil producers and then later clarified that there is “less trust than normal”. However, the market has now turned clearly bearish again, leading to a sharp retreat in oil prices. US crude fell 85 to $31.02.

Oil prices dropped to their lowest since 2003 last month under the pressure of a supply surplus of around one million barrels per day.

In the US, total production (http://ir.eia.gov/wpsr/overview.pdf) fell by 33,000 barrels a day to 9.1 million barrels a day last week, the EIA report said.

The proposal was aimed at addressing the supply glut issue, which has pulled down oil prices by 70% since mid-2014.

Last week, Saudi Arabia and Russian Federation agreed to freeze output at January 2016 production levels, urging Iran to join in on the deal.

And merely not adding more barrels to the market may have little impact on the excess supply, given that OPEC production is running at its highest in many years and increased further in January. However, he did not specify if Iran would also keep its production.

That is more than any other energy source, although its share stays below 10 percent of the mix, as the EU Emissions Trading System (ETS), which BP says it supports, remains too weak to drive a faster transition to lower carbon sources.

Dale said: “What is clear is the oil market is behaving like any market”.

Saudi Arabia and Russia-the world’s top oil producing nations-had earlier proposed to freeze output if other producers followed suit.

Demand for petrol soared by over five per cent compared to a year ago, while stockpiles of oil in the USA rose by 3.5m barrels in the week, hitting an all-time high of over 507m barrels.

“We are in the situation where we will continue to have an oversupplied market”, Victor Shum, a vice president for Asia Pacific at IHS Inc., said in a Bloomberg Television interview Wednesday. “It will be a sustainable development but there will be no jump, it will not be affecting the global market”, he said.