Oil slides below $30 on oversupply fears

Oil resumed its seemingly inexorable slide on Friday with prices on both sides of the Atlantic slipping below $30 a barrel as investors braced for the full return of Iranian barrels to the market.

Amid expectations that sanctions linked to Iran’s nuclear programme could be lifted as soon as this weekend, Brent, the international oil marker, dropped $1.40, or more than 4.5 per cent, to a fresh 12-year low of $29.46 barrel.

• Meanwhile, West Texas Intermediate, the US oil benchmark, fell $1.77 — almost 6 per cent — to $29.41. Both prices rallied on Thursday as speculators betting against oil closed some of their positions. Brent has had one of its worst starts to a year on record, falling 21 per cent.

“Signals now point to Iran reaching ‘Implementation Day’ at least two to four months sooner than we and the market initially expected,” said analysts at Barclays in a report.

Although Iranian officials had signalled towards the end of 2015 that sanctions could be lifted as early as January, oil market observers and western diplomats had said it would take months longer.

Iran claims it will be able to increase production by 500,000 barrels a day immediately after the lifting of sanctions and within seven months reach its pre-sanctions level of at least 3.4m b/d.

While oil analysts believe these targets are hugely ambitious, any extra Iranian barrels hitting the market will add to a global supply glut that has pushed prices down more than 70 per cent since mid-2014. It could also delay the rebalancing of the market.

“Global macroeconomic concerns are mounting . . . Opec supplies are rising . . . and non-Opec supply is not adjusting fast enough, meaning that there is still further downside risk to prices this quarter,” the Barclays analysts said.