Rising US Crude Output Reason behind Falling Oil Prices: Iranian Oil Minister

The U.S.is pumping an additional 900,000 barrels a day, Iran's Oil Minister Bijan Namdar Zanganeh said Wednesday on state radio.

That is just below the price seen in November, when OPEC and 10 other oil-producing countries agreed to cut their production to combat a growing supply glut and push the market up.

The decrease in oil price came while OPEC's compliance with the deal is about 106 percent, though Libya and Nigeria, which are exempt from the oil cut deal, increased output by 350,000 b/d in May, and their production is increasing now.

OPEC in a meeting in May agreed to extend until March 2018 an oil output cut deal that was sealed past year to help shore up prices. Brent crude futures were down 16 cents at $47.21 per barrel at 0841 GMT. USA crude futures for August were down 7 cents at $43.44, having hit their lowest since September on Tuesday. A recent report from the International Energy Agency predicted next year's increase in output by non-OPEC countries will be slightly higher than the increase in global demand.

In the USA, data on Friday showed a record 22nd consecutive week of increases in the number of U.S. oil rigs, bringing the count to 747, the most since April 2015.

A dozen non-members led by top oil producer Russian Federation, which reduced output in tandem with OPEC, would also join the scheme.

"Even with OPEC compliance above the agreed targets, USA inventories are not falling as fast as expected".

Pointing to the fact that it is too early to see the effect of OPEC's decision to extend the cuts by March next year, Zanganeh noted, "Achieving consensus to reduce production is hard, yet we need to wait and see how the market will react to low prices in the next few weeks".

  • Zachary Reyes