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Oil prices halted their rally on Monday, with both benchmarks down nearly 1 per cent, after Russia’s finance minister said Russia and OPEC may decide to boost production to fight for market share with the United States, where output remains at record highs.

Losses were limited by a tightening of global supplies, as output has fallen in Iran and Venezuela amid signs the United States will further toughen sanctions on those two OPEC producers, and on the threat that renewed fighting could wipe out crude production in Libya.

Brent crude futures ended the session at $71.18 a barrel, down 37 cents, or 0.5 per cent, having earlier slid below $71. Brent hit its highest since Nov. 12 on Friday at $71.87.

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U.S. West Texas Intermediate crude futures fell 49 cents, or 0.8 per cent, to settle at $63.40 per barrel.

Oil prices have been lifted by more than 30 per cent this year, mainly due to a deal by the Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, to curb by 1.2 million barrels per day from Jan. 1 for six months. The group will meet in June to decide whether to continue withholding supply.

Russian Finance Minister Anton Siluanov said over the weekend that Russia and OPEC may decide to boost production to fight for market share with the United States, but this would push oil as low as $40 per barrel.

“There is a dilemma. What should we do with OPEC: should we lose the market, which is being occupied by the Americans, or quit the deal?” Siluanov, speaking in Washington, said, TASS reported.

“(If the deal is abandoned) the oil prices will go down, then the new investments will shrink, American output will be lower, because the production cost for shale oil is higher than for traditional output.”

While the minister said he did not know whether OPEC countries would be happy with this scenario, the group’s de facto leader, Saudi Arabia, is considered keen to keep cutting, but sources within OPEC said it could raise output from July if disruptions continue elsewhere.

“Today’s trade provided further evidence of a bull market beginning to show some wear and tear but also a market that doesn’t appear to have achieved an interim price top,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

“Although talk of potential Russian production increase appeared to weigh on values today, the Saudis remain adamant in spearheading a sharp OPEC output cut that has thus far remained undeterred by Brent values above the $70 mark.”

Oil prices have faced pressure from a surge in U.S. crude output, which is at a weekly record of 12.2 million bpd, thanks to a shale revolution.

U.S. crude oil output from seven major shale formations is expected to rise by about 80,000 bpd in May to a record 8.46 million bpd, the government said.

The U.S. drilling rig count, an indicator of future production, last week rose for a second week in a row.

“I would expect oil to trade in a relatively tight band around $70 for the time being,” said Virendra Chauhan, oil analyst at Energy Aspects in Singapore, pointing to differing signs from the United States and OPEC on future supply.

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