Oil prices down over 1% on Greek default

Oil prices fell over 1 percent on Wednesday after Greece became the first developed economy to default on a loan with the International Monetary Fund, and as both US and OPEC production hit new records.

Greece’s last-minute overtures to international creditors for financial aid on Tuesday were not enough to save the country from becoming the first developed economy to default on a loan with the International Monetary Fund.

The IMF confirmed that Greece had not made its scheduled 1.6 billion euro ($1.78 billion) loan repayment to the fund. As a result, IMF Managing Director Christine Lagarde will report to the global lender’s board that Greece is “in arrears”, the official euphemism for default.

Front-month Brent crude futures were trading at $62.79 per barrel at 0654 GMT, down 80 cents and over 1.25 percentage points. U.S. crude futures fell 92 cents to $58.55 per barrel.

Analysts said rising production from the Organization of Petroleum Exporting Countries (OPEC) as well as in the United States were also weighing on prices.

“Iraqi crude production climbed to a record level this month, with OPEC crude oil output estimated to have reached 32.1 million barrels per day against a target of 30 million barrels per day,” ANZ said in a morning note.

Overall OPEC supply rose to a three-year high of 31.60 million barrels per day (bpd) in June, up from 31.30 million bpd in May, according to a Reuters survey.

The group has raised output by more than 1.3 million bpd since it decided in November 2014 to defend market share rather than prices.

A final deal between world powers and Iran over Tehran’s nuclear work could add to supplies. A June 30 deadline for a nuclear deal that could let Iran export more crude into an oversupplied market has been extended by a week to July 7.

In the United States, crude production rose 9,000 barrels a day to 9.701 million barrels a day in April, the highest since May 1971, the U.S. Energy Information Administration said in monthly data released Tuesday.

Crude inventories rose by 1.9 million barrels in the week to 468.9 million, compared with analyst expectations for a decrease of 2.000 million barrels.

However, demand was also up with refinery crude runs rising by 77,000 barrels per day, API data showed.