TheCable

Crude oil prices fell to what used to be a six-year-low, plunging below $40 less than 24 hours after Iran threatened to increase supply by 500,000 barrels a day.

In August 2015, crude oil fell to a six-year-low at $39.86, but has since stood above $40, only for West Texas Intermediate (WTI) to fall by 1.8 percent to $39.96 on Wednesday.

Brent crude was largely unchanged at $43.59 a barrel.

The fall was largely attributed to oversupply in the global oil market, following Iran’s decision to stay deviant to a revised supply system planned out by the Organisation of Petroleum Exporting Countries (OPEC).

On Tuesday, Bijan Zanganeh, Iran’s oil minister, said the country would not negotiate with OPEC before it increases it supply of crude oil.

“We will not negotiate with OPEC to increase our production. We will only notify them when we adapt,” he said while addressing reporters in Tehran.

“We should not be worried about the price, those who have taken advantage of the absence of Iran to increase their production and have benefited should worry.”

Saudi Arabia and other OPEC members have refused to cut supply despite falling crude prices, following the exploration of United States shale oil.

There has been an obvious oversupply in the market, with Nigeria and Angola increasing production by close to 300,000 barrels in the past six months.

Iran, who produced as much as four million barrels of oil per day, now produces 2.8m barrels per day, with plans to increase that by 500,000 barrels immediately western sanctions are lifted, regardless of its tendency to further drive oil prices down.

OPEC daily basket price stood at $38.29 dollars a barrel on Tuesday after hitting a six-year-low on Monday, as it fell to $38.18 a barrel, from $39.21 the previous Friday.

If the oversupply trend continues, revenues of oil dependent states would continue to experience a corresponding fall.