Oil prices hit their lowest since 2003 yesterday, as the market braced for additional Iranian exports after the lifting of sanctions against the country over the weekend.

The US and EU on Saturday revoked sanctions that had cut Iran’s oil exports by about two million barrels per day (bpd) since their pre-sanctions 2011 peak to little more than one million bpd.

Iran, a member of the Organisation of the Petroleum Exporting Countries (Opec), said on Sunday that it is ready to increase exports by 500,000 bpd.

Worries about Iran’s return to an already oversupplied oil market drove down Brent crude to $27.67 a barrel early yesterday, its lowest since 2003. The benchmark was at $28.59 by 0921 GMT, down 38 cents from its settlement on Friday.

US crude was down 38 cents at $29.04 a barrel, not far from a 2003 low of $28.36 hit earlier in the session.

“Iranian exports come at a very bad time,” Barclays analysts said.

HSBC chief executive Stuart Gulliver, meanwhile, said the price of oil is likely to settle between $25 and $40 in a year’s time.

“Major producers are currently delivering 2-2.5 million bpd more than demand, so the question is how long they can continue to overproduce at that level,” he said at the Asia Financial Forum in Hong Kong yesterday.

While some analysts see an initial increase of 500,000 bpd or more in Iranian exports as easy to achieve, further production increases are considered as challenging.

“Iran needs significant foreign investment and technology to repair and build out its production potential,” Morgan Stanley said. But the bank believes that Iran is capable of adding 600,000 bpd to the market initially.

Iran has at least a dozen Very Large Crude Carrier super-tankers filled and in place to sell into the market, and traders are betting that oil prices will drop again.

Data shows that short positions in US crude markets, which would profit from further price falls, have hit a record high.

Since the market is strongly one dimensional with net shorts at an all-time high it could face further downside potential in the short term, Energy Aspects analyst Virendra Chauhan said.

The lifting of sanctions will unlock more than $100 billion in Iranian frozen funds, permitting Iran to finance imports.

Iranian President Hassan Rouhani plans to visit Italy and France next week on his first European trip since sanctions were lifted, a diplomatic source said yesterday.

“The legs of Iran’s economy are now free of the chains of sanctions and it’s time to build and grow,” Rouhani tweeted on Sunday.

Iran’s transport minister said that Tehran plans to purchase 114 aircraft from Airbus.