Analysts say no significant rebound expected in short-term.
World oil prices fell below $32 a barrel on Monday for the first time in 12 years amid signs that Iran could be free to increase exports within weeks.
In New York trade, U.S. benchmark West Texas Intermediate for February delivery slumped $1.75 to $31.41 per barrel, a level last witnessed on December 23, 2003. European benchmark Brent North Sea crude for February delivery dropped $1.61 to $31.55 a barrel, a low last seen in April 2004.
Prices had already plunged by 10 percent last week as concerns about China, the world’s biggest energy consumer, eclipsed a strong U.S. jobs report.
“At the moment not many people are expecting to see a significant rebound in oil, so prices are continuing to gush lower to multi-year lows as sentiment goes from bad to worse,” said Gain Capital analyst Fawad Razaqzada.
Analysts still had to weigh looming geopolitical risks, including the Saudi Arabia-Iran spat, against the prospects of new supply coming onto the market from Iran as sanctions are lifted.
The European Union foreign affairs chief, Federica Mogherini, said Monday she expected the Iran nuclear deal to be implemented “rather soon” with Tehran on track to meet its pledge to put a bomb beyond its reach. “My expectations are that this day could come rather soon,” Mogherini said in Prague. “The implementation of the agreements is proceeding well, it’s encouraging,” she added.
Implementation of the deal would lead to a lifting of economic sanctions on Tehran and possibly bring another one million barrels of oil per day onto the already flooded global market within months.