Crude oil prices sink to lowest in almost 7 years as Iran pledges more oil

 Unleaded fuel drips from a petrol pump at a gas station in this arranged photograph in Croydon, UK, Dec 11, 2015.
Unleaded fuel drips from a petrol pump at a gas station in this arranged photograph in Croydon, UK, Dec 11, 2015. PHOTO: BLOOMBERG

SEOUL (BLOOMBERG) - Oil extended declines from the lowest price since February 2009 as Iran pledged to boost crude exports, bolstering speculation Opec members will exacerbate the global oversupply.

Futures dropped as much as 1 per cent in New York on Monday (Dec 14) after losing almost 11 per cent last week, the most in a year.

There's "absolutely no chance" Iran will delay its plan to increase shipments even as prices decline, said Deputy Oil Minister for International Affairs Amir Hossein Zamaninia.

Hedge funds and other large speculators raised bearish bets to an all-time high, US Commodity Futures Trading Commission data showed.

Oil prices have slumped to levels last seen during the global financial crisis as the Organisation of Petroleum Exporting Countries (Opec) effectively abandoned production limits to defend market share, fuelling a record surplus. The glut will persist at least until late 2016 as demand growth slows and Opec shows "renewed determination" to maximise output, according to the International Energy Agency.

"The price war will likely drag on until the end of next year," said Mr Hong Sung Ki, a commodities analyst at Samsung Futures in Seoul. "Saudi Arabia won't be able to cut its production while Iran continues to increase output."

The US benchmark West Texas Intermdiate (WTI) for January delivery fell as much as 35 cents to US$35.27  (S$49.78) a barrel on the New York Mercantile Exchange and was at US$35.39 at 12.27pm Seoul time. The contract decreased US$1.14 to US$35.62 on Friday, the lowest settlement since February 2009. The volume of all futures traded was about 27 per cent above the 100-day average.

Brent for January settlement was down as much as 49 US cents, or 1.3 per cent, at US$37.44 a barrel on the London-based ICE Futures Europe exchange on Monday. It slid US$1.80 to US$37.93 on Friday, the lowest close since December 2008. The European benchmark crude was at a premium of US$2.22 to WTI.

Iran, which expects international sanctions over its nuclear programme to be lifted by the first week of January, has already secured customers for its planned supply expansion, Mr Zamaninia said in an interview in Teheran. The government is preparing to offer oil and natural gas contracts to investors next month. The country pumped 2.8 million barrels a day last month, data compiled by Bloomberg show.

"Our general assumption is on a market with low prices, so the price can drop as low as possible as we are prepared for the worst scenario," Mr Zamaninia said.

Opec, which chose not to cut output at a Dec 4 meeting, is displaying hardened resolve to maintain sales, the IEA said in its monthly report on Friday.

While the group's strategy has impacted other producers, triggering the steepest fall in non- Opec supply since 1992, world oil inventories will probably swell further once Iran restores exports, the Paris-based energy adviser predicted.