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Oil falls on Saudi production pledge

Danny Johnston/Associated Press

Retail gasoline prices in the United States are now averaging $3.846 per gallon.

NEW YORK - A pledge from Saudi Arabia to pump more oil to cover supply shortages and new signs that China’s economy is slowing helped sink oil prices Tuesday.

Oil has risen more than 9 percent this year. The primary reason is a standoff over Iran’s nuclear program that has threatened to disrupt oil supplies from the Middle East.

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Benchmark US crude fell $2.48 to $105.61 per barrel in New York.

The Saudi government said it aims “to provide adequate supplies of petroleum, stabilize oil markets, and return oil prices to fair levels for producers, consumers, and the oil industry.’’ Saudi Arabia produces about 10 million barrels a day.

Iran exports more than 2 million barrels of oil each day. The European Union and the United States have imposed sanctions that make it tougher for Iran to sell its oil. In response, Iran has threatened to block oil shipments through the Strait of Hormuz.

Concern about a slowdown in China’s economy also pressured oil prices. Mining giant BHP Billiton forecast weakening Chinese demand for iron ore used in steelmaking.

Meanwhile, retail gasoline prices in the United States now average $3.846 per gallon, according to auto club AAA, Wright Express, and Oil Price Information Service.

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