Brent held losses near a two-week low amid a broader rout in commodities as Iran’s plan to regain market share bolstered speculation a global glut will persist.
Futures were little changed in London after falling 0.8 percent Monday. Iran is seeking to restore production once sanctions are removed regardless of the impact on prices, Oil Minister Bijan Namdar Zanganeh said. US crude stockpiles are set to remain almost 100 million barrels above the five-year seasonal average even as supplies are forecast to have dropped for a second week.
Brent’s recovery from a six-year low has faltered on signs the surplus will be prolonged as Iran seeks to restore output after its nuclear accord with world powers, joining OPEC members in defending market share.
The full impact of increased Iranian exports won’t be observed until 2016, banks including Citigroup Inc. predicted.
“The broader picture still remains, we’re in a supply glut,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “The sentiment will be bearish for a while until we see what Iran can actually do in terms of getting new production into the market.”
Brent for September settlement was at $56.61 a barrel on the London-based ICE Futures Europe exchange, down 4 cents, at 11:47 a.m. Singapore time. The contract slid 45 cents to $56.65 on Monday, the lowest close since July 6.
The European benchmark crude traded at a premium of $6.31 to West Texas Intermediate for the same month.
WTI for August delivery, which expires Tuesday, was 16 cents lower at $49.99 a barrel in electronic trading on the New York Mercantile Exchange. It declined to as low as $49.85 on Monday, trading below $50 for the first time since April.
The more-active September future was down 14 cents at $50.30. Total volume was about 53 percent below the 100-day average.
Iran is seeking to produce almost 4 million barrels a day within seven months of sanctions being removed, expanding to 4.7 million as soon as feasible after that, Zanganeh said in Tehran on Monday.
The Persian Gulf nation, the fourth-largest producer in the Organization of Petroleum Exporting Countries, pumped 2.85 million barrels a day in June, data compiled by Bloomberg showed.
Iran is in talks with other OPEC members about raising its crude exports, Amir-Hossein Zamaninia, the deputy oil minister for international and commercial affairs, said in Tehran. Shipments shrank to 1.4 million barrels a day last year due to sanctions over its nuclear program, according to the US Energy Information Administration.
In the US, the world’s biggest oil consumer, crude inventories probably decreased by 1.75 million barrels in the week ended July 17, based on the median estimate in a Bloomberg survey of eight analysts before an EIA report Wednesday. Stockpiles previously slid to 461.4 million, the lowest level since March.