Oil fell back below $40 a barrel on Monday after Iran said that it would increase output before joining talks on a production freeze and a pipeline carrying crude from Iraqi Kurdistan to Turkey reopened. Brent, the international oil marker, has rebounded almost 45 per cent from a 13-year low near $27 a barrel in January, helping to spur a wider rally in commodity markets. The rally came as major producers started work on a plan to freeze output, and supply disruptions removed more than 800,000 barrels a day of production from the market. But many analysts believe that the advance has gone too far too fast and are tipping the price to fall back, with supply still expected to outstrip demand for most of 2016. On Monday, Brent fell as much as 3.5 per cent to $38.82 a barrel, while West Texas Intermediate, the US oil benchmark, was down 4.5 per cent to $36.69 a barrel. “Two key drivers which have been important for the price rally to $40 are fading,” said Bjarne Schieldrop, chief commodities analyst at SEB, a Nordic bank. Saudi Arabia, Opec’s biggest producer, and Russia agreed last month to freeze oil output at January levels, but only if other large producers such as Iran and Iraq agreed to do the same.