Approaching midday in London, Brent North Sea crude for delivery in March shed 67 cents to hit Dollars 28.09 compared with the close on Tuesday.

The IEA said Iran is expected to add around 300,000 barrels a day of additional crude by the end of the first quarter and about 600,000 barrels by mid-year.

The gain in dollar makes dollar-priced crude more expensive for customers that use weaker currencies, while denting demand and prices. It bounced back to trade down US$1 at US$27.46 as of 1239 GMT. “There are considerable uncertainties around the quality and quantity of oil that Iran can offer to the market in the short term and the not inconsiderable challenge of finding buyers willing to take more oil into an already glutted market”, the IEA argues.

Some analysts say that Monday’s drop didn’t reflect a fundamental change and that Iranian crude should have been priced into the Brent contract months ago.

While OPEC refuses to trim output, Russian Federation is pumping at record post-Soviet levels and USA shale producers proved their resilience against low prices, the glut is expected to remain in the market through at least the first half of 2016.

The low price of oil is a boon to American consumers, who are enjoying gasoline below $2 per gallon at most stations. Consumption growth will slow this year to 1.2 million barrels a day, or 1.3 per cent, from 1.7 million a day in 2015, according to the report, averaging 95.7 million barrels a day.

Saudi Arabia’s oil production peaked at 10.6m bpd in June 2015, while Iraq has increased output over the year by around 700,000 barrels, reaching 4.2m bpd in November last year, the NCB said.