Oil prices have fallen below $28 per barrel to its lowest point since 2003 as sanctions against Iran were lifted.
Brent crude oil fell as low as $27.67 before settling at $29.25. US crude oil fell to $28.86.
Economic sanctions against Iran were lifted over the weekend, allowing it to contribute to the global supply of oil. Oversupply is already the key reason behind the dramatic decline of prices, but analysts say Iran could contribute half a million barrels every day. According to the US Energy Information Agency, Iran has the fourth largest oil reserves in the world.
Phillip Futures analyst Daniel Ang said: "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."
Ordinarily, Opec (the Organisation of Petroleum Exporting Countries) cuts production to reduce oversupply and boost prices. However, this time around the organisation, which is led by Saudi Arabia, has resisted calls to cut production. Some critical analysts have argued that Saudi Arabia has done this for political reasons, to reduce revenues going to rival, Middle Eastern countries.