(Ecofin Agency) - Oil prices fell on Monday after Iranian Oil Minister, Bijan Zanganeh, destroyed hopes of joining other producers in freezing production.

U.S. crude traded at $38.15 per barrel on Monday morning, down 35 cents from their last settlement.

Zanganeh had said that Iran will only join the pact between other producers on a possible freeze after its own production reaches 4 million bpd, adding that Iran saw $70 per barrel as a suitable oil price, but would be satisfied with less.

“They should leave us alone as long as Iran's crude oil has not reached 4 million. We will accompany them afterwards,” Zanganeh said.

Brent crude dropped 26 cents at $40.13 a barrel after data revealed that Saudi Arabia's February oil production was at 10.22 million bpd.

“Oil prices now seem to have bottomed, even though they are likely to stay subdued for the rest of this year before starting to move higher in 2017. When oil prices are falling below production costs, the income gains for consumers will be smaller than the costs to producers, and falling oil prices become a negative-sum game,” Morgan Stanley said.

The U.S bank added that cheap oil had so far not provided the economic boost to growth that many had hoped for.

While the International Energy Agency (IEA) had said that oil prices bottomed out as a result of U.S. and other production cuts, others like Goldman Sachs and Barclays, cautioned that global overproduction of about 1 million bpd will push prices back down again.

“At least two quarters of prices below $40 per barrel... are required to balance the oil market," Barclays told Reuters.

Anita Fatunji