Oil prices have fallen around 2% due to concerns about the ongoing supply glut.

Brent crude futures LCOc1 were down 77 cents and traded at $38.76 per barrel, while the US crude futures CLc1 were 77 cents lower and traded at $36.41 a barrel, Reuters reported.

The fall came after Organization of the Petroleum Exporting Countries (OPEC) said in its latest report that demand for its crude worldwide would be less in 2016 as supply from rivals proves more tough to low oil prices, increasing the market supply glut.

In 2016, the cartel expects global demand for its crude to average 31.52 million barrels per day (bpd).

"In 2016, the cartel expects global demand for its crude to average 31.52 million barrels per day."

In February, OPEC produced 32.28 million bpd, which is down around 175,000 bpd from January primarily due to outages in Iraq and Nigeria.

Due to continuous high output, production will exceed demand globally by at least one million bpd and will drag on markets.

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In order to tackle the supply glut, Saudi Arabia and Russia along with Qatar and Venezuela have put in a proposal that major oil producers should freeze output at January levels.

However, with high crude inventories in the US, and Iran’s disagreement for the deal, analysts expect no change to the future glut.

Based on secondary sources, it was revealed that Iran’s output increased 187,800bpd to 3.132 million barrels a day in February, following the lifting of international sanctions.

Image: OPEC expects global demand for its crude to average 31.52 million barrels per day. Photo: courtesy of renjith Krishnan / FreeDigitalPhotos.net.