Brent oil falls below $28 after Iran sanctions lifted

A general view shows a unit of South Pars Gas field in Asalouyeh Seaport, north of Persian Gulf, Iran November 19, 2015. REUTERS Photo

Brent crude fell below $28 a barrel in Asia on Jan. 18 for the first time in more than 12 years on fears about a worsening supply glut after Western sanctions on Iran were lifted, allowing Tehran to resume oil exports.

Up to half a million barrels per day of Iranian crude could be added to already saturated markets after US and European leaders ended a crippling embargo put in place over Tehran's nuclear programme.
 
The news led to further selling of the black gold, which has fallen by about three quarters since mid-2014 owing to the supply glut, record output levels, weak demand and a slowing global economy.
 
Brent for March delivery tumbled to as low as $27.67, or by 4.4 percent from Friday's close, before rebounding to trade at above $28. The last time Brent closed below $28 was in November 2003.
 
At around 0600 GMT, the contract was trading 49 cents, or 1.69 percent, lower at 28.44. US benchmark West Texas Intermediate for delivery in February was down 41 cents, or 1.39 percent, at $29.01.
 
"The drop was due to the Western sanctions on Iran being lifted. This means we will be seeing a bigger oil glut with Iranian crude exports coming back to the market," said Phillip Futures analyst Daniel Ang.
 
He said prices rebounded on some bargain-buying.
 
The United States and European Union lifted the sanctions on Jan. 17 after the UN's atomic watchdog confirmed that Iran had complied with its obligations under a landmark deal in July to curb Tehran's nuclear programme.
 
Ric Spooner, chief market analyst at CMC Markets in Sydney, said that while Iranian oil could come in quickly, suppliers still needed to find buyers.
         
"Iran has quite a large storage of oil at the...

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