New York/ New Delhi: Oil fell back from $50 a barrel in early trade on Monday after Saudi Arabia hinted that the output freeze agreed upon by the OPEC cartel countries last month would be effected quite gradually.
Instead, the Indian basket, composed of 73 percent sour grade Dubai and Oman crudes, with sweet grade UK Brent making up the rest, breached the psychologial level on Friday at $50.14 per barrel, which was higher than the $49.27 it closed on Thursday.
"It is a very gentle hand on the wheel, we are not doing anything dramatic," Saudi Arabian Energy Minister Khalid al-Falih said in his address at the ongoing World Energy Congress in Istanbul.
Saudi Arabia is the leading producer of the 14-nation Organization of the Petroleum Exporting Countries (OPEC), which late last month reached an agreement to freeze output between 32.5 and 33 million barrels a day amid a situation of supply glut and falling prices.
The US West Texas Intermediate was trading on Monday at $49.35 a barrel, that is 46 cents, or 1 percent, lower than its weekend close on the New York Mercantile Exchange.
OPEC at its September meeting in Algiers also agreed to set up a committee to consider the output share of each member nation, which would file a report at the next meeting due in Vienna in November.
An OPEC spokesperson said the committee is also meant to coordinate a collective agreement between the cartel`s members in a bid to accelerate the process of re-balancing the oil market "by sharing the burden of adjusting the output between both OPEC and non-OPEC producers".
On early trade on Monday, UK Brent crude dipped 42 cents to $51.51 a barrel on the London ICE Futures Exchange, after touching a four-month high on Friday.
Oil prices have fallen by more than two-thirds, from over $100 a barrel to under $30 between June 2014 and January 2016. Prices have recovered somewhat this year, rising to nearly $50 in May, before dropping to just over $40 a barrel in recent weeks.
Saudi Arabia had refused to agree to any production curbs unless its rival Iran agreed to the same, too.
OPEC member Iran has been ramping up production to its pre-sanctions levels despite the recent supply glut. It was earlier reported that Iran`s crude oil exports touched a five-year high in August at 2.11 million barrels per day -- up 15 percent from its July exports.
OPEC`s second biggest producer Iraq said over the weekend that it wants to raise production further in 2017.
The price of OPEC`s basket of 14 crudes closed at $48.58 a barrel on Friday.