Oil prices dip after Iran says it won’t freeze output

AP File Photo

SINGAPORE, Singapore—Oil prices dipped in Asia Monday after Iran said it has no plans to join any output freeze by other major crude producers.

The Organization of the Petroleum Exporting Countries (OPEC), of which Iran is a member, is due to meet in Vienna on June 2 after talks in Doha involving OPEC members and other major producers such as Russia in April failed to reach a deal to cap production.

Despite a recent rebound, world crude prices are still below half their levels in June 2014 due to oversupply.

Iran only returned to world oil markets in January after the lifting of nuclear-linked Western sanctions.

At about 0345 GMT, US benchmark West Texas Intermediate (WTI) for delivery in July, a new contract, was down 28 cents, or 0.58 percent, at $48.13 a barrel. Brent North Sea crude for July was down 16 cents, or 0.33 percent, at $48.56.

Bloomberg News reported that Rokneddin Javadi, managing director of National Iranian Oil Co., told the Mehr news agency of Iran that “the government has no plans for the time being to freeze or interrupt its increase in oil output and exports based on plans that are being carried out.”

“In the current context, the oil ministry and the government have issued no policy or program to halt the increase in production and exports and so, the country’s plans to increase crude output continues,” he added.

CMC Markets senior sales trader Alex Wijaya told AFP that the news out of Iran dashed rising confidence among traders on a tightening of the supply-demand equation, with US output steadily falling and Nigeria and Canada suffering temporary cutbacks.

Officials had on Sunday lifted the evacuation order for several oil production sites north of Fort McMurray, the city threatened by massive Canadian wildfires, although officials said thick smoke still prevented a resumption of most production.

The fires, which forced the evacuation of 100,000 residents of Fort McMurray and the oil facilities to the north, interrupted extraction and refining of an estimated 1.2 million barrels of oil per day.

However, Wijaya said that the traders’ focus will now shift to longer term supply issues.

“There is concern that supply could still exceed demand at this point of time,” Wijaya said.

“The key going forward is the OPEC meeting. If there is a strong agreement from the meeting and concrete implementation, the market will react to this,” he added.

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