Crude oil prices fell around 3% today after Iran poured cold water on market hopes of a coordinated production freeze any time soon, according to Reuters.
N. Sea benchmark Brent crude futures fell back below $40 a barrel, trading at $39.27 down $1.12 on Friday’s close. Brent hit a 12-year low of $27.10 in January.
Tamas Varga, oil analyst at London brokerage PVM Oil Associates explained: “Oil is down because Iran said it would only join the output freeze group once they reached production of 4 million barrels a day.”
He was referring to comments by Iran’s oil minister on Sunday that the OPEC member would join discussions after its output reached that level.
Iran’s oil exports are due to reach 2 million bpd in the Iranian month that ends on March 19, up from 1.75 million in the previous month, he said.
According to the Shana news agency, Iran and Russia could cooperate on a swap which would see Russia send oil and gas to northern Iran in return for Iranian supply to Russian customers in the Gulf.
Saudi Arabia appeared to have stuck to a preliminary deal with some other producers to freeze output, as its crude production held steady in February at 10.22 million barrels per day (bpd), an industry source told Reuters.
Meanwhile, Morgan Stanley has warned that a slowing global economy and high production would prevent any sharp rises in oil prices.
“Oil prices now seem to have bottomed, even though they are likely to stay subdued for the rest of this year before starting to move higher in 2017,” the US merchant bank said in a research note.