Oil Drums

Oil prices have fallen to their lowest since 2003 following the lifting of international nuclear sanctions against Iran.

The benchmark stood at $28.59, down 38 cents, while the US crude CLc1 fell 38 cents at $29.04 a barrel, Reuters reported.

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Sanctions that had reduced Iran’s oil exports by about two million barrels per day (bpd) since the pre-sanction time of 2011 were lifted by the US and European Union.

Following this development, Iran is expected to increase exports by 500,000bpd adding to worries of the country’s return to an already oversupplied oil market and hit Brent crude LCOc1 to $27.67 a barrel.

After sanctions are removed international markets are reopened to huge barrels of Iranian oil.

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"We have come a long way since the IAEA first started considering the Iran nuclear issue in 2003."

Morgan Stanley told the news agency that the country will require more foreign investment and technology in order to repair and build out its production potential.

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Iran is set to enter the market with at least a dozen very large crude carrier super-tankers that are already filled and in place for sale.

Lifting of sanctions is expected to unlock more than $100bn in dormant Iranian funds and will allow the country to finance imports.

International Atomic Energy Agency (IAEA) director general Yukiya Amano said in a statement: "We have come a long way since the IAEA first started considering the Iran nuclear issue in 2003.

"A lot of work has gone into getting us here, and implementation of this agreement will require a similar effort. For our part, we are ready to get on with the job."

Image: The US crude CLc1 fell 38 cents at $29.04 a barrel. Photo: courtesy of Victor Habbick/ FreeDigitalPhotos.net.