Oil slips in muted start to week

One of the Ejigbo ‘oil wells’

One of the Ejigbo ‘oil wells’

World oil prices dipped in subdued trade on Monday after the OPEC crude producers’ cartel opted late last week to leave its output ceiling unchanged.

In early afternoon London deals, Brent North Sea crude for July shed 26 cents to $63.05 a barrel, compared with Friday’s closing level.

US benchmark West Texas Intermediate (WTI) for delivery in July reversed 52 cents to $58.61 a barrel.

“Crude oil prices opened lower this week and continued to remain under pressure following the OPEC meeting on Friday which failed to provide any direction,” said Sucden brokers analyst Myrto Sokou.

“The outcome from OPEC meeting… failed to surprise the oil market participants as OPEC members maintained the current level of crude oil output, as expected.”

Investors were mulling the long-term impact on prices after the 12-nation Organisation of the Petroleum Exporting Countries (OPEC) on Friday defied calls to cut output to alleviate a global supply glut that has seen prices slump almost 50 percent over the past year.

Instead, they kept their collective target at 30 million barrels per day — where it has stood for more than three and a half years.

OPEC countries are reported to be actually pumping more than 31 million barrels a day, with the risk of more coming on line.

– Iran return? –

Meanwhile on Monday, traders were weighing the possible return of Iranian supplies that have been curtailed by international sanctions against Tehran, analysts said.

Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at business consultancy firm EY, said prices are “likely to remain volatile” ahead of a June 30 deadline for Iran and world powers to come to an agreement on curbing Tehran’s nuclear programme.

Six global powers — Britain, China, France, Germany, Russia and the United States — are trying to nail down a deal to curb Iran’s nuclear ambitions by reducing its stockpiles of enriched uranium and mothballing some of its sites.

If the agreement is reached and implemented, the powers have agreed to gradually scale back sanctions imposed since 2012, including on its petroleum industry.

Iran has the world’s fourth-largest oil reserves but its exports have fallen from more than 2.2 million barrels per day in 2011 to about 1.3 million because of the sanctions.

“Any likelihood of a deal could act as a trigger for downward movement of crude prices,” said Gupta.

Tehran’s Oil Minister Bijan Zanganeh had forecast last week that Iran’s oil production could be lifted by one million barrels per day (bpd) within half a year of Western sanctions being lifted.

Questioned about the Islamic republic’s oil output at an OPEC summit in Vienna, he said Wednesday: “We believe that immediately, or after one month of lifting the sanctions, (we will achieve) half a million (extra) barrels per day, and after 6-7 months we will achieve one million barrels.”

“Iran, because of the sanctions and limitations, has reduced production and exports,” he added.

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