Oil prices slide to lowest point since 2003 as Iran floods market

Oil Prices Sliding

Oil prices have reached their lowest price since 2003 in early trading on Monday, as the market braces for a big jump in oil exports led by lifted sanctions in Iran.

The UN nuclear watchdog group on Saturday said Tehran was meeting its commitments to curtail its nuclear program. Following those findings the US revoked sanctions that had slashed the OPEC member’s oil exports by around 2 million barrels per day.

Iran said it was prepared to increase its crude exports by 500,000 barrels per day, its deputy oil minister said on Sunday.

International Brent crude LCOc1 fell to $27.67 a barrel early on Monday, the lowest price point since 2003. It then recovered to $28.25 by 0103 GMT, still down more than 2% from their settlement on Friday.

US crude CLc1 was down 58 cents to $28.84 a barrel after hitting a 2003 low of $28.36 earlier in the session.

“The lifting of sanctions on Iran should see further downward pressure on oil and commodities more broadly in the short term,” ANZ said on Monday.

“Iran’s likely strategy in offering discounts to entice customers could see further downward pressure on prices in the near term,” it added.

Even before Iran re-enters the market, producers are already over pumping by a million barrels or more of crude every day in excess of demand. As China’s markets have continued to fall apart, demand for oil in the country has continued to plummet, leading to an even larger oil glut.

Oil prices have fallen by over 75% since their high in mid-2014 and by over 25% since the start of 2016.