Oil prices have slipped by close to 3% after Iran abandoned plans to join fellow OPEC and non-OPEC countries in capping crude oi production at January levels.

In February, Russia, Saudi Arabia and a few other OPEC countries struck a deal to freeze, rather than cut, production in a bid to draw a line under price falls. Iran was initially opposed as it had only recently returned to global oil markets after the lifting of sanctions imposed on it by the international community over the possibility that it was working towards the development of a nuclear weapon.

The country’s oil minister, Bijan Zanganeh, said that Iran would not engage in discussion to effect a freeze on output until daily production had reached at least 4 million barrels per day.

“Iran is desperate to repair the damage done to its economy by years of being at odds with the international community and they see selling as much of their oil as they can regardless of the price as one of a number of ways in which they can achieve that objective,” said Mayuki Hoda, a senior commodities researcher at Mizuho Corporate Global.

The development comes after OPEC’s monthly oil market report showed the group produced 3.1 million barrels per day in February, a 187,000 barrel-per-day increase over February and heading in the opposite direction to a freeze.

“OPEC produced 32.38 million barrels a day in February and its own forecasts show it expects demand to reach 31.5 million barrels per day,” said Hoda. “This surplus combined with the oversupply from non-OPEC countries is will continue to weigh on prices so we’re not expecting a return to $50 oil any time soon.”

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