Crude oil prices traded at their lowest levels in the past 12 years amid concerns over the impending return of Iranian oil to the global market.
Brent crude oil prices fell below $30 a barrel for the first time since 2004 as oversupply worries continued to roil the oil market.
"Brent is currently priced lower than WTI, which has very rarely been the case in the past five years, and can be explained by the prospect of oil supply from Iran already increasing in the near future," said Commerzbank Corporates & Markets in a note.
Western sanctions on Iran over its nuclear programme are likely to be lifted this weekend, as the International Atomic Energy Agency (IAEA) is expected to give full marks for the country's progress on conditions laid down in the nuclear agreement reached in July last year.
"Iran has announced on a number of occasions it wishes in this event to immediately scale up its oil exports by 500,000 barrels per day. Within six months, oil deliveries are to rise by a total of 1 million barrels per day. This could further drive prices down in the short term purely on the basis of the psychological effect," said Commerzbank.
Global brokerage Goldman Sachs had said in December last year global glut and growth concerns may pressure the crude oil market further, leading oil prices to fall to as low as $20 a barrel in the coming months.
Overall, crude oil prices have seen a nearly 70% decline since June 2014, falling from highs of over $100 a barrel, as the Organisation of the Petroleum Exporting Countries (OPEC), which produces 31.7 million barrels a day, decided not to cut output to defend market share. The global oil supply glut was worsened by growing US stockpiles.
"The Iranian return to the oil market is not really news any more. What is more, a leading representative of the state Iranian oil company NIOC recently announced that Iran wished to expand supply only slowly in order not to put further pressure on prices," said Commerzbank.