Oil fell nearly 3 per cent yesterday after the Organisation of Petroleum Exporting Countries (Opec) promised to keep pumping near maximum capacity, but losses were limited as the cartel conceded it could not cool the red hot market.
US light crude fell $2.07 cent to $73.10 (€59) a barrel, distancing itself from the $75.35 record high struck on Friday. London brent crude slipped $1.73 to $72.84 a barrel. Opec, the source of more than one-third of the world's oil, kept its production ceiling of 28 million barrels per day (bpd) unchanged at talks by ministers in Doha, accepting that it was powerless in reining in runaway prices.
"Opec's move was to be expected and there is nothing really new going on in Iran," said Muhammad-Ali Zainy of the Center for Global Energy Studies. "The drop in prices is more profit-taking than anything else."
Opec ministers also said geopolitical tensions in Iran, Nigeria and other key oil-producing nations have added as much as $15 per barrel to the price of oil.
"The market determines the oil price," Saudi oil minister Ali Al-Naimi, Opec's most influential voice, said at the International Energy Forum in Doha.
"You know and I know that the reason the price is where it is is not from a shortage of [ crude oil] supply," he said.
Many analysts see little chance of a sustained pull-back in prices, which have climbed more than 20 per cent since January.
Investment funds are ploughing cash into the market amid growing concerns, surrounding Iran's nuclear programme, and worries about the state of summertime US petrol supply. "There is little prospect of oil prices weakening, unless geopolitical tensions fade away or there is a collapse in oil demand, neither of which seems likely at the moment," said the Center for Global Energy Studies in its monthly oil report.
Iran's oil minister Kazem Vaziri sought to calm the market over the weekend by reiterating that the oil weapon was off the table in its dispute with the West, which fears Tehran wants to build an atomic bomb.
"We strongly believe there is no reason for sanctions but in any case we will not cut our oil exports," he said in Doha.
Iran's foreign ministry said at the weekend that its decision to enrich uranium was irreversible, despite the threat of sanctions or military action.
