Oil revival falters as Iran warns of glut

Crude prices have bounced back from their January lows of $27

The ‘Starla’, an Iranian crude oil tanker at sea in February (EPA)

Oil’s recent price revival was stopped in its tracks yesterday as Iran’s energy minister said the nation could pump more than a million extra barrels into over-supplied global markets before it considers joining a production freeze.

Tehran is now free to sell its oil after sanctions were lifted last year – but the extra supply comes as worries over China’s growth has dampened demand and oil cartel Opec has been driving down the price to take on US shale producers.

Crude prices have bounced back from their January lows of $27 – the lowest for 12 years – but sank yesterday on reports of Iran’s oil minister Bijan Namdar Zanganeh saying that the country could lift oil production by as much as third to 4 millions barrels a day.

Brent crude fell 3 per cent or $1.30 to $39.09 a barrel while the US West Texas benchmark slipped more than 4 per cent or $1.70 to $36.80.

Iran’s intervention comes weeks after Saudi Arabia, along with Russia, Qatar and Venezuela, said they would hold output at January levels if other oil-producing nations agreed to join the first global oil pact in 15 years. Alexander Novak, Russia’s energy minister, struck a conciliatory tone, saying: “We totally understand Iran’s position to increase production and revive its share in the global market.”

Figures showed Saudi Arabia kept its crude oil production steady in February, pumping 10.22 million barrels per day after the top oil exporter struck a preliminary deal with other producers to freeze output.