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Oil prices fell below $28 per barrel on Monday after Western sanctions against Iran over its nuclear programme were lifted over the weekend.

Brent crude futures traded for as low as $27.67 per barrel before rebounding to about $28.54 on London’s ICE Futures exchange for March loadings. The prices of Brent crude, the global oil price benchmark, have fallen by over 25 percent in 2016 alone.

The West Texas Intermediate, the US benchmark, fell to about $28.36 on the New York Mercantile Exchange – the lowest since 2003.

Over the last decade, Western countries led by the United States imposed crippling sanctions on Iran for its nuclear programme, which the Middle Eastern country says are for peaceful purposes. The sanctions particularly targeted its vast oil industry, causing oil output to decline from 2.5 million barrels per day in 2011 to about one million barrels per day in 2015.

With the lifting of Western sanctions following the implementation of a nuclear deal to prevent Iran from acquiring a nuclear weapon, Iran has said it would swiftly add 500,000 barrels per day to its oil output and total oil exports will reach two million barrels per day by year-end.

Iran’s return to oil markets look set to worsen the oil glut that has caused prices to crash by over 70 percent in the last 18 months.

The Organization for Oil Exporting Countries (OPEC), which is led by Iran’s archrival Saudi Arabia, has so far refused to cut oil production to allow oil prices to recover. OPEC, which controls about 40 percent of world oil exports, has been trying to maintain its market share in order to hurt North American shale oil producers, who require high oil prices to remain viable.

Last week, Nigeria’s oil minister, Emmanuel Ibe Kachikwu, urged OPEC to summon an emergency meeting to reconsider its strategy as oil-dependent economies, including Nigeria, are stuttering under low oil prices. Kachikwu’s comments were, however, dismissed by Abu Dhabi’s oil minister, Suhail bin Mohammed al-Mazroui, who insisted that OPEC’s strategy was effective and oil prices would recover this year.

Chibuike Oguh is Financial Nigeria's Frontier Markets Analyst