Oil prices dropped today as Iraq’s giant West Qurna-2 field commenced production, weighing on crude prices due to oversupply concerns.

Brent crude dropped by $0.19 to $107.88 a barrel, while US oil was down by $0.26 to $101.41, reported Reuters.

Crude prices dropped after Iraq’s Oil Minister Abdul-Karim Elaibi said Russia’s Lukoil-led group has commenced oil production from the massive West Qurna-2 oil field in southern Iraq.

The minister said that production had started from the 14 billion barrel field at rate of 120,000bpd, to be increased to 400,000bpd by the end of 2014.

A Texas-based energy intelligence firm revealed that oil production from the US’ two largest shale formations increased in February after brutal winter conditions disrupted a year-long trend of robust growth in January and December.

Crude prices are set to rise due to growing tensions between Russia and the West.

"Crude prices are set to rise due to growing tensions between Russia and the West."

The US Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov have discussed ways to defuse the crisis over Ukraine, with Kerry telling Moscow that progress depends on a Russian troop pullback from Ukraine’s borders.

Nigerian crude exports are set to fall to their lowest since 2009, due to a production outage for the Forcados grade.

Image: Iraq is moving closer to its output target of four million barrels per day in 2014. Photo: courtesy of Suat Eman.