Investing.com – The Organization of Petroleum Exporting Countries (OPEC) were mulling over the possibility of increasing their production cuts due to the larger-than-expected output coming from the U.S., Iranian oil minister Bijan Zanganeh said on Wednesday.
"The U.S. oil production increase was unpredictable and this increase is more than what OPEC members had foreseen," Zanganeh admitted, according to a report from Iranian state broadcaster IRIB.
“We are in consultation with OPEC members to prepare ourselves for a new decision,” he said.
Oil prices have been under pressure in recent weeks as concern over rising U.S. shale output offset production cuts by OPEC and non-OPEC members.
U.S. drillers last week added rigs for the 22nd week in a row, extending a year-long drilling recovery to the highest level since April 2015, implying that further gains in domestic production are ahead.
The increase in U.S. drilling activity and shale production has mostly offset efforts by OPEC and other producers to cut output in a move to prop up the market.
Last month, OPEC and some non-OPEC producers extended a deal to cut 1.8 million barrels per day in supply until March 2018.
So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers that are exempt from the deal, such as Libya and Nigeria.
So far this year, oil has lost 20% in value, effectively entering a bear market on Tuesday and also registering its worst performance for the first six months of the year since 1997, according to Reuters’ data.
Zanganeh admitted that reaching any agreement among the cartel was “very difficult”.
He gave no indication on the possible timing of a decision, though the Joint Ministerial Monitoring Committee that oversees compliance with the production cut agreement was expected to meet in late July.
U.S. crude futures gained 0.37% to $43.67 by 8:23AM ET (12:23GMT), while Brent oil rose 0.24% to $46.13.