Oil dropped from a three-week high as Iran repeated its goal of boosting crude exports after sanctions on the nation are lifted.

Futures slipped 3.4 percent in New York. Iran’s priority is to boost shipments to pre-sanction levels, Oil Minister Bijan Namdar Zanganeh said, according to the state-backed IRNA news agency. Commodities tumbled amid fresh concerns about Chinese economic growth as the Shanghai Composite Index fell the most in a month.

The global glut that’s sent West Texas Intermediate crude toward its second yearly decline may deepen after the Organization of Petroleum Exporting Countries effectively abandoned output limits this month. Brent, the benchmark for more than half the world’s oil, is poised to end 2015 with the lowest  annual average price in 11 years, hurting energy-exporting countries and companies.
 
“The fundamentals remain weak after last week’s short-covering rally,” said Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut. “Nobody appears to be cutting back on supply and we still have to contend with worries of slowing economic growth not only in China but also Europe.”
 

WTI for February delivery slipped $1.29 to settle at $36.81 a barrel on the New York Mercantile Exchange. Prices rose 1.6 percent to $38.10 on Thursday, the highest since Dec. 4. Trading was closed Friday for the Christmas holiday. The volume of all New York oil futures traded was 58 percent below the 100-day average at 2:50 p.m.

Brent for February settlement fell $1.27, or 3.4 percent, to end the session at $36.62 a barrel on the London-based ICE Futures Europe exchange. Prices touched $35.98 on Dec. 22, the lowest since 2004. The European benchmark crude closed at a 19-cent discount to WTI.

Industrial Profits

Chinese equities fell as industrial company profits declined and concern grew a new system for initial public offerings will damp demand for existing equities. China is the world’s biggest energy consumer.

“The fall in Chinese industrial profits is further evidence of a slowing Chinese economy,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund. “We can expect further government action to spur growth, something they’ve done with mixed success over the past year.”
 

Iran sees the potential for further oil-price declines as it plans to boost supply amid a lack of OPEC cooperation, said Rokneddin Javadi, head of National Iranian Oil Co., according to the Shana news agency. The nation plans to add 500,000 barrels a day of exports within a week of the removal of sanctions, said Javadi, who is also the country’s deputy oil minister. Overseas shipments should climb by 1 million barrels a day within six months, he said.

OPEC Target

The 13-member OPEC, which controls about 40 percent of global oil production, abandoned its formal output target in its Dec. 4 meeting as it attempts to drive higher-cost producers from the market. That is adding to the glut that is also hurting its own members. Saudi Arabia is said to be considering selling stakes in state-owned companies to help stem a budget deficit that reached 20 percent of its economy.

U.S. crude inventories probably declined 2.5 million barrels last week, according to a Bloomberg survey of analysts. Stockpiles slid 5.88 million barrels in the week ended Dec. 18, the biggest loss since June, an Energy Information Administration report showed on Dec. 23. Gulf Coast refiners typically curb deliveries at the end of the year to reduce local taxes.

“The unexpected decline in crude inventories we saw last week had more to do with year-end tax considerations than any shortage of supply,” McGillian said.