The price fell below $28 (25.70 euros) a barrel in Asia for the first time in more than 12 years on Monday, after Western sanctions on Iran were lifted - allowing Tehran to resume oil exports.

That means up to half a million barrels per day of Iranian crude could be added to already saturated markets, after a crippling oil embargo put in place over Tehran's nuclear program was ended by US and European governments.

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

Sanctions were lifted Sunday after the UN's atomic watchdog confirmed that Iran had complied with its obligations under a negotiated deal in July to curb Tehran's nuclear program.

Singapore's DBS Bank said in a research note that adjusted for inflation, oil is now cheaper than at any time since 1998, at the height of the Asian financial crisis.

Supply glut

Oil prices have been declining sharply since mid-2014 because of increased North American shale oil production, soft demand growth due to an economic slowdown in China, and an end of cheap dollar funding that had fueled energy investments, as the US Federal Reserve scaled back stimulus and tightened its monetary policy.

Brent crude scheduled for March delivery tumbled to as low as $27.67 - about 4.4 percent from Friday's close - before rebounding to trade at above $28. The last time Brent closed below $28 was in November 2003.

jar/rc (Reuters, AFP)