Oil prices shed more than one per cent today after Iraq said it did not want to be part of an Opec deal to slash production to help rebalance the market.
Brent crude was trading down 63 cents, or 1.22 per cent, this afternoon to $51.15 per barrel. West Texas Intermediate (WTI) crude, the US benchmark, was down 67 cents, or 1.32 per cent, to $50.18 per barrel.
Iraqi oil minister Jabar Ali al-Luaibi said Baghdad wants to be exempt from any production cut the Organisation of the Petroleum Exporting Countries is aiming to finalise at a meeting next month in Vienna.
Officials said Iraq could raise output slightly this month, up from 4.8m bpd produced in September. Most of this is exported.
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However, price losses were capped by Iran saying it would encourage other members of the consortium of the world's biggest oil producing countries to join an output freeze.
Under a provisional agreement reached last month, Opec plans to reduce production from the 33.39m bpd it was producing in September to between 32.5m and 33m bpd. The group would like non-Opec producers to cut output as well.
Oil prices are currently hovering around $50 per barrel after hitting a ten-year low of less than $30 per barrel in January.
Before the comments from Iraq, oil ministers had indicated that the worst was over.
"The current down cycle is nearing an end," Saudi Oil Minister Khalid al-Falih said.
"Market fundamentals, in terms of supply and demand, have begun to improve," he added. "We are optimistic that oil prices will continue to improve in the future."
Analysts have said that despite the news, oil markets may be about to overbalance in terms of production and consumption. This follows similar comments last week.
"Statistical balances suggest that conditions have improved markedly. We suspect that the market is moving more quickly into balance than is generally recognised," Barclays bank said in a note to clients on Sunday.