Brent crude oil prices are forecast to fall to near $30 a barrel before the US oil output sees a decline in the second half of the year, according to a global brokerage firm.

A fall in US oil production is expected to help the oil market to rebalance, says UBS in a note.

Commodity are estimated to fall further by 10% due to oversupply situation, said Dominic Schnider, head of commodities and Asia-Pacific foreign exchange at UBS's wealth-management unit in Hong Kong.

"What we are going to see in the first half of 2016 is that US production, year-on-year, will start to decline," Bloomberg quoted Schnider as saying. "Once you see that happening, the market will become more comfortable, the prices actually can stabilise."

Crude oil prices ushered in the New Year on a positive note, posting a 2% gain on the back of growing tensions between Saudi Arabia and Iran.

"Any direct military dispute between the two hegemonic powers in the Middle East would have grave consequences for global oil supply, as almost 30% of the worldwide oil supply is produced in the Persian Gulf region," said Commerzbank Corporates & Markets.

Schnider expects the rally witnessed in oil prices on Monday after Saudi Arabia cut ties with Iran to last for a week or two.

Saudi Arabia's embassy in Tehran was attacked on Sunday to protest against the execution of 47 people, including one Shiite cleric. Following the incident, Saudi Arabia had cut diplomatic relations with Teheran and ordered Iranian diplomats to leave the Kingdom.

Brent crude prices recorded a 35% fall last year, posting a decline for a third consecutive year as oversupply led a slump in prices.

Overall, crude oil prices have seen nearly 70% decline since June 2014, falling from highs of over $100 a barrel as the Organization 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.