Brent oil futures slide below $28 as Iran sanctions lifted

Brent oil futures slide below $28 as Iran sanctions lifted

Brent oil futures fell below the $28-level to hit a fresh 13-year low on Monday, as international sanctions against Iran’s nuclear program were lifted over the weekend, opening the door to a wave of new oil and adding to concerns that a global glut will linger.

Analysts say the country could quickly ramp up exports by around 500,000 barrels. The surge in Iranian shipments is viewed as bearish for crude, which has fallen approximately 75% from its peak of $115 two summers ago, amid a glut of oversupply on markets worldwide.

Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by the Organization of the Petroleum Exporting Countries last year not to cut production in order to defend market share.

Most market analysts expect a global glut to worsen in the coming months due to soaring production in North America, Saudi Arabia and Russia.

On the ICE Futures Exchange in London, Brent oil for March delivery sank to a session low of $27.67 a barrel, a level not seen since October 2003, before recovering slightly to trade at $28.18 by 07:40GMT, or 2:40AM ET, down $1.06, or 3.62%.

London-traded Brent futures plunged $4.40, or 13.74%, last week, its sixth losing week in the past seven. Brent prices are down almost 25% since the start of the year, as lingering concerns over China’s economic outlook added to the view that a global supply glut may stick around for much longer than anticipated.

China is the world’s second largest oil consumer after the U.S. and has been the engine of strengthening demand.

Elsewhere, crude oil for delivery in March on the New York Mercantile Exchange shed 63 cents, or 2.09%, to trade at $29.76 after falling to a daily low of $29.35, the weakest level since October 2003.

New York-traded oil futures plummeted $3.52, or 11.28%, last week, its 12th losing week of the last 14. The U.S. benchmark has lost nearly 22% since 2016 began.

Meanwhile, Brent’s discount to the West Texas Intermediate crude contract stood at $1.58, compared to a gap of 48 cents by close of trade on Friday.

U.S. crude has been firmer relative to Brent lately, on signs that the U.S. oil market is likely to grow tighter following Congress’ decision to lift a 40-year old ban on domestic oil exports.