Brent crude bounced back to trade at $28.86 after it had earlier crashed to $27.67 per barrel – the lowest price since 2003, the BBC reports.
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But the good news is that the Organization for Petroleum Exporting Countries (OPEC) predicts by the middle of this year, the price of oil per barrel will bounce back to its normal price.
In the US, the price recovered from $28.36 to $29.65 – a sign of good times to come.
The current sanctions on Iran’s oil has shaped the amount of oil in the market; but analysts fear that when the restriction is lifted from the country, there might be oversupply concerns – considering the fact that Iran stated it is very much capable of producing extra 500,000 barrels daily.
"This means we will be seeing a bigger oil glut with Iranian crude exports coming back to the market," said Daniel Ang, an analyst with Phillip Futures.
OPEC foretells that countries not belonging to the group may be unable to continue with production given that the price of oil might continue to drop. Whatever the case, OPEC still believes crude price will recover by mid-2016.
Iran was sanctioned and its oil dropped by the international community after it emerged that the country was toying with nuclear weapons production. But the IAEA suggested on Saturday for the restrictions imposed on the country to be lifted given that Iran is complying with international regulations prevention nuclear weaponry.
The US Energy Information Agency declares Iran to be the fourth largest oil reserve country in the world.
"Iran has quite a large storage of oil at the moment. They are in a position to sell that if they choose to do so and increase supply quite quickly," said Ric Spooner, chief market analyst at CMC Markets.
When there is oversupply of oil in the market, price decline results; but the recent experience has not been without the influence of US shale oil which nearly took over the entire market.
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"Major producers are currently delivering 2-2.5 million barrels per day more than demand, so the question is how long they can continue to overproduce for at that level," said Stuart Gulliver, CEO at HSBC, while speaking at the Asia Financial Forum in Hong Kong.