Crude prices have dropped further due to growing oversupply concerns, with US oil prices falling by more than 3% to $27 a barrel.
Brent futures fell 60 cents to $28.16 a barrel, while US crude futures were trading down 97 cents at $27.49 a barrel, Reuters reported.
The slump in crude prices came after the International Energy Agency (IEA) warned that oil markets could ‘drown in oversupply’ in 2016, the news agency said.
In its latest oil market report for January 2016, IEA said: "Iran, now relieved of sanctions, insists it will boost output by an immediate 500,000kpd.
"Our assessment is that around 300,000bpd of additional crude could be flowing to world markets by the end of the current quarter."
Ayers Alliance chief investment financial officer Jonathan Barratt told Reuters that oil prices are at a level where Organization of the Petroleum Exporting Countries (OPEC) are all selling the commodity for cashflow not for profit.
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Iran’s announcement to export huge barrels of oil after lifting of sanctions will add to worries of an already oversupplied oil market.
A preliminary survey conducted by Reuters revealed that commercial crude oil stocks in the US were forecast to have increased by three million barrels last week.
Investors are watching for data to be released by the American Petroleum Institute later on Wednesday.
Image: The US crude futures were trading down 97 cents at $27.49 a barrel. Photo: courtesy of renjith Krishnan/FreeDigitalPhotos.net.