Persistent oversupply, bloated inventories and a slew of negative economic news pressured prices so that by mid-January crude oil touched 12 year lows.
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The oversupply is set to worsen with the return of Iranian barrels to the market following the lifting of nuclear-related Western sanctions.
The IEA, which issues regular reviews of the health of the energy market, said more price weakness could lie ahead as a result.
On whether the oil price could fall further this year, the agency said: “The answer to our question is an emphatic yes”.
“Can it go any lower?” the IEA asked.
The US and European Union on Saturday revoked sanctions that had cut Iran’s oil exports by about 2 million barrels per day since their pre-sanctions 2011 peak to little more than 1 million barrels per day.
The IEA maintained its expectation for global oil demand growth this year at 1.2 million barrels a day, down from the 1.8 million barrels a day in 2015 it anticipated in December.
According to IEA, International Energy Agency, there could be yet another fall in the price of Oil as there has been an excessive supply of the same in placed where there is much lesser demand.
Iran is beginning efforts to boost output and exports by 500,000 barrels a day now that restrictions have been lifted, Amir Hossein Zamaninia, deputy oil minister for commerce and global affairs, said Sunday. However, analysts said however that the return to the market of Iranian oil will be gradual due to certain constraints. For 2016 demand for crude is expected to grow on average by 1.2 million barrels daily, which is sharply lower than the rate of growth experienced in 2015.
“The re-entry of Iran… is expected to further add to the supply glut”, said EY analyst Sanjeev Gupta.
The U.S. premium over Brent hit its highest level since 2010 on Monday as Iran’s oil will be exported to Brent-priced Europe and Asia while regulations still restrict it from going to the United States.
Capital Economics’ analysts expect oil prices to rise from less than $30 per barrel at present to $45 per barrel by the end of this year.
Iran has at least a dozen Very Large Crude Carrier super-tankers filled and in place to sell into the market. Brent crude has already plunged in value by 21 percent this year.
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As it attempts to claim market share in the Mediterranean, the National Iranian Oil Co. will seek to reactivate its contract with the SUMED pipeline that carries oil from the Red Sea into the region, the IEA said.
