Oil slides as OPEC holds target while new Iran-driven glut looms

(Bloomberg) — Oil fell as Iran's vow to boost crude exports after OPEC maintained its output target renewed speculation that a global oversupply will persist.

Brent crude lost as much as 0.8 percent and West Texas Intermediate dropped 0.9 percent. Iran can double oil exports within six months of international sanctions ending even if prices decline, the country's representative to the Organization of Petroleum Exporting Countries said Sunday, according to state-run Islamic Republic News Agency. OPEC kept its production target at 30 million barrels a day at a meeting on Friday.

While Saudi Arabia, the biggest crude exporter, led OPEC to continue its policy of refraining from cutting output and forcing a slowdown in rival U.S. shale production, the group has exceeded its quota for the last year. Oil's rally from a six- year low has faltered amid speculation that the rebound will encourage American companies to restart idled drilling rigs.

"It's now hard to see additional upward pressure on oil," Hong Sung Ki, a commodities analyst at Samsung Futures Inc., said by phone. "It will be difficult to see whether Iran will be able to instantly boost exports when the sanctions lift, but it will definitely be bearish for prices in the short run."

Saudi Arabia's strategy of defending its market share is working as "demand is picking up, supply is slowing," Oil Minister Ali al-Naimi said in Vienna. While OPEC has ceded the role of adjusting supply to balance the market, its policy of keeping up production is still driving prices lower now, and possibly higher later on.

In the U.S., rigs targeting oil declined by four to 642, Baker Hughes Inc. said on its website Friday. That's the lowest since August 2010. The number of machines in Texas's Eagle Ford shale formation, one of the country's most prolific fields, fell by four to 86. They gained by one in the Permian Basin, the nation's largest oil field, the data show.

While drilling has slowed, the U.S. still pumped almost 9.6 million barrels a day in the week through May 29, the highest weekly rate since at least 1983, federal Energy Information Administration data show. The country sent 586,379 barrels a day abroad in April, the most in government data going back to 1920.