Oil prices slid in early trading on Wednesday, extending sharp falls from the previous session after top exporter Saudi Arabia ruled out production cuts and industry data showed a further build in U.S. crude stockpiles.
Meanwhile, Iran made clear it has no interest in restraining its production after international sanctions against it were lifted in January, calling a joint Russian/Saudi proposal for major exporters to freeze output “laughable.”
U.S. West Texas Intermediate (WTI) crude futures were trading at $31.49 per barrel at 0104 GMT, down 38 cents from their last settlement. International benchmark Brent futures were down 15 cents at $33.12 a barrel. Both contracts fell more than 5 percent the previous day.
The falls were a result of an apparent lack in cooperation among members of the Organization of the Petroleum Exporting Countries (OPEC) to freeze or cut production to rein in ballooning oversupply that has pulled down prices by 70 percent since mid-2014.
Saudi Arabia’s oil minister Ali Al-Naimi said on Tuesday that a coordinated production cut by OPEC and non-OPEC exporters was “not going to happen because not many countries are going to deliver.”
He also said that a proposed freeze in output at January levels, which were near record highs, would require “all the major producers to agree not to add additional barrels.”
While non-OPEC giant Russia has tentatively agreed on freezing its output at January levels, when they hit a post-Soviet record, Iran called the proposal “laughable.”
“Some of our neighbours have increased their production to 10 million barrels a day in recent years and export this amount, and now they have the nerve to say we should all freeze our production together,” Bijan Zanganeh was quoted as saying by the Iranian news agency ISNA.
“So they should freeze their production at 10 million barrels and we should freeze ours at 1 million barrels – this is a laughable proposal,” he said.
Between 1 million and 2 million barrels of crude are currently produced every day in excess of demand, leaving storage facilities around the world brimming with unwanted supplies.
“Crude oil prices have topped out… The lack of geopolitical cooperation will keep OPEC production high,” ANZ bank said.
The American Petroleum Institute (API) said that crude inventories rose 7.1 million barrels in the week to Feb. 19 to 506.2 million, far exceeding expectations of a 3.4 million barrels rise.
The U.S. Energy Information Administration will report official inventory data later on Wednesday.