LONDON: Oil prices fell on Monday, pulled down by rising Russian production and the highest US drilling activity in more than three years.
Analysts expect higher US output to offset supply curbs by the Organization of the Petroleum Exporting Countries (OPEC), which have been in place for 18 months and have pushed up prices significantly over the past year.
Benchmark Brent crude was down 65 cents at $75.81 a barrel by 1330 GMT. US light crude fell 60 cents to $65.14.
The number of new rigs drilling for oil in the United States rose by one last week to 862, its highest since March 2015, data from energy services company Baker Hughes showed.
That suggests US crude output, already at a record 10.8 million barrels per day (bpd), will climb further.
Russian news agency Interfax said on Saturday that Russia’s oil output had risen to 11.1 million bpd in early June, up from slightly less than 11 million bpd for most of May and above its target output of under 11 million bpd.
But markets are worried by falling supply from Venezuela and the potential of lower exports from Iran.
Venezuelan production is falling because of sanctions, economic crisis and mismanagement, while Iran faces US sanctions over its nuclear programme that are likely to curb exports in the next few months.
“Sentiment is caught in a tug of war between the drop in supply from Iran and Venezuela and the prospect of rising output from OPEC/non-OPEC coupled with rampant US shale production,” said Stephen Brennock, analyst at brokerage PVM Oil Associates.
OPEC, together with some non-OPEC producers including Russia, started withholding output in 2017 to try to end a global supply glut and support prices.
“Non-OPEC supply is expected to rise sharply in 2019, led by US shale growth, along with Russia, Brazil, Canada and Kazakhstan,” US bank JPMorgan said.
“Oil fundamentals are expected to weaken in 2019 on the back of stronger than expected non-OPEC supply, but also the potential release of barrels from OPEC as the joint accord between OPEC and non-OPEC is unlikely to stay in place,” JPMorgan said in its quarterly outlook.
OPEC and its partners are due to meet June 22-23 in Vienna.
Iraq’s oil minister said on Monday that producers should not be influenced by pressure to pump more oil.
Jabar al-Luaibi said that oil prices still require support and stability, and producers “should not over-exaggerate” the oil market’s need for more supplies.
“This could be misinterpreted by speculators and consumers, leading to a significant fall in oil prices,” he said.