Core Strategic Partners have reported that global oil prices have continued their slide and breached the $30-a-barrel level after Iran re-entered the already oversupplied market ready to sell its crude. After years of UN sanctions that imposed restrictions on the country selling its oil on the open market, Iran is expected to target India and Europe once the restrictions on sales are fully lifted.

Oil prices closed below $30 for the first time in 12 years at the end of last week as supply glut concerns and worries over falling demand lead many to speculate that the $25-a-barrel price point could be next to fall.

At the heart of the collapse in oil prices is the ongoing battle of will between the members of oil cartel, OPEC and the high-cost shale oil producers in the US and elsewhere who have ramped up production in recent years to the point where they threaten to encroach on OPEC’s market share.

“OPEC knows these producers need higher prices to be economically viable so its keeping output high in order to exert downward pressure on prices. This, it hopes, will result in the shale oil producers going out of business,” explained Will Masson, chief market strategist at Core Strategic Partners.

Masson thinks oil is significantly oversold at current price levels and suggested that a relief rally is on the cards. “We’d expect to see a rally of 3 or 4 dollars to get back to the mid-30 level but, beyond that, we don’t see much support for higher prices in the short term,” he said.

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