London (Feb 24) Oil extended declines after oil ministers from Iran and Saudi Arabia signaled they’re unwilling to curtail production.

Futures slid as much as 3.7 percent in New York. Saudi Arabia won’t cut supply as it doesn’t trust fellow exporters to follow suit and believes high-cost producers should bear the burden of rebalancing markets, Ali Al-Naimi said Tuesday. Iranian Oil Minister Bijan Namdar Zanganeh said a Saudi-Russia proposal to freeze output was “ridiculous” since Iran seeks to boost exports after years of sanctions, according to his ministry’s news agency, Shana.

“The probability of supply cuts has come down from 2 percent to less than 1 percent,” Hannes Loacker, an analyst at Raiffeisen Bank International AG, said by e-mail from Vienna. “If Saudi Arabia and Russia adhere to their January production figures, this doesn’t change the supply picture too much. The only game changer would be if Iran participates, but why should they do that when other countries increased production while Iran was under sanctions?”

Crude is down 17 percent this year on speculation a global glut will persist. Iran is seeking to boost production by 1 million barrels a day in 2016 after sanctions were lifted last month. U.S. stockpiles, at their highest in more than eight decades, expanded by 7.1 million barrels last week, the industry-funded American Petroleum Institute was said to report Tuesday.

West Texas Intermediate for April delivery fell as much as $1.19 to $30.68 a barrel on the New York Mercantile Exchange and was at $30.78 as of 11:58 a.m. London time. The contract for that month lost $1.52, or 4.6 percent, to $31.87 on Tuesday. Total volume traded Wednesday was about 18 percent above the 100-day average. Prices lost 30 percent last year.

‘Inevitable Reckoning’

Brent for April settlement slid as much as 90 cents, or 2.7 percent, to $32.37 a barrel on the London-based ICE Futures Europe exchange. Prices fell $1.42 to $33.27 on Tuesday. The European benchmark crude traded at a premium of $1.73 to WTI.

Iraq seeks “complete agreement” on the preliminary accord reached in Doha last week between Saudi Arabia, Russia, Venezuela and Qatar, Oil Minister Adel Abdul Mahdi said in an interview in Tokyo on Wednesday. “If some people freeze and others raise, then this is not a good policy,” he said.

The accord marks “the beginning of a process” that will continue with further talks between producing countries in March, according to Al-Naimi. Saudi Arabia won’t reduce output because it doesn’t trust other countries to join in, he said in Houston. Cutting low-cost output to subsidize higher-cost supplies only delays an “inevitable reckoning,” he said.

Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, increased by 307,000 barrels last week, the API reported Tuesday, according to a person familiar with the figures. A Bloomberg survey showed that nationwide supplies probably rose by 3.25 million barrels. The Energy Information Administration is scheduled to report data on Wednesday.

Source: Bloomberg