AKIPRESS.COM - The oil price has fallen below $28 a barrel amid fears the lifting of Western sanctions on Iran could worsen the existing oversupply problem.

Brent crude, used as an international benchmark, fell as low as $27.67 a barrel, its lowest since 2003, before recovering slightly to trade at $28.17, reports BBC.

The price of US crude fell below $29 a barrel to $28.86.

The lifting of the Iran sanctions mean half a million barrels more oil per day could be produced, say analysts.

"The drop was due to the Western sanctions on Iran being lifted. This means we will be seeing a bigger oil glut with Iranian crude exports coming back to the market," said Phillip Futures analyst Daniel Ang.

The decision to lift the sanctions against Iran came on Sunday after the international nuclear watchdog, the IAEA, said Iran had complied with a deal designed to prevent it developing nuclear weapons.

Iran has the fourth largest proven oil reserves in the world, according to the US Energy Information Agency and any additional oil would add to the one million barrels a day of over-supply that has led to a more than 70% collapse in oil prices since the middle of 2014.

Analysts said Iran already had quite a lot of oil ready to sell.