Oil in London slid below $45 a barrel for the first time since March 2009, as Iran reiterated it will boost production and US drillers showed no signs of slowing.
Iran plans to raise oil production “at any cost” to defend the country’s market share, Bijan Namdar Zanganeh, Iran's oil minister, said. "This is not the Oil Ministry's policy, but the government's," Bloomberg reported.
“We will be raising our oil production at any cost and we have no other alternative. If Iran’s oil production hike is not done promptly, we will be losing our market share permanently.”
The number of active oil rigs in the US rose for the seventh time in eight weeks, Baker Hughes Inc. data showed Friday.
Oil’s worsening global surplus has fueled pessimism and driven prices down by more than 30% since May, prompting hedge funds to cut bullish bets to a five-year low. Iran is joining leading members of the Organization of Petroleum Exporting Countries in raising production while US crude stockpiles are almost 100 million barrels above the five-year seasonal average.
“The continued concern around Iran and the risk of a longer than expected re-balancing in the oil market is certainly increasing,” Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Sydney, said by phone. “Over the next month, we will see the end to the peak driving season in the US. It does not bode well for the fundamentals.”
Brent for October settlement declined as much as $1.22 to $44.24 a barrel on the London-based ICE Futures Europe exchange and was at $44.36 at 3 p.m. Sydney time. The contract lost $1.16 to $45.46 on Friday. The European benchmark crude traded at a $5.03 premium to West Texas Intermediate, the US marker grade.
Iran had the second-biggest output in the OPEC before US-led sanctions banning the purchase, transport, finance and insuring of its crude began July 2012.
Oil producers such as BP Plc and Royal Dutch Shell Plc have expressed interest in developing the country’s reserves, the world’s fourth-biggest, once sanctions are removed. WTI for October delivery decreased as much as $1.45, or 3.6%, to $39 a barrel on the New York Mercantile Exchange, the lowest intraday price since February 2009. Prices fell 4.8% through Friday for an eighth weekly drop, the longest losing streak since 1986. Total volume was more than double the 100-day average.
OPEC, which supplies about 40% of the world’s crude, has pumped above its quota of 30 million barrels a day for more than a year, according to data compiled by Bloomberg.
Iran’s output trailed that of Saudi Arabia and Iraq in July.
