Oil prices tumbled 4% on Monday, coming close to their 11-year low, on growing fears that the global oil glut would worsen in the months to come in a pricing war between leading OPEC and non-OPEC producers.
Brent crude fell by 4% to below $36.40 a barrel for the first time since December 2008 and U.S. West Texas Intermediate (WTI) sank almost 3% below $34.60 a barrel.
Brent traded only 14 cents above the lows last seen during the 2008 financial crisis of $36.20 a barrel.
If Brent falls below that level, that will be its lowest since mid-2004 - a year when oil was beginning its surge from the single digits it hit during the 1998 financial crisis and when talk of a commodity super-cycle was only beginning.
WTI's financial crisis low was $32.40 in December 2008.
"Oil is coming under pressure as the lack of OPEC cuts mean incessant oversupply continues," said Amrita Sen from Energy Aspects think tank.
Both benchmarks have fallen every day since the Organization of the Petroleum Exporting Countries on Dec. 4 abandoned its output ceiling. In the past six sessions, they have shed more than 13% each.
OPEC has been pumping near record levels since last year in an attempt to drive higher-cost producers such as U.S. shale firms out of the market.
New supply is likely to hit the market early next year as OPEC member Iran ramps up production once sanctions are lifted as expected following the July agreement on its disputed nuclear program.
"All new production will be earmarked for exports," BMI Research said in a note. "In addition to volumes released from storage, Iran will be able to increase crude oil and condensates exports by a maximum of 700,000 b/d by end-2016," it said.
Iran's crude oil exports are set to hit a six-month high in December as buyers ramp up purchases in expectation that sanctions against the country will be lifted early next year, according to an industry source with knowledge of tanker loading schedules.
Iranian news agency Shana quoted on Monday manager director of Iran's Central Oil Fields Company, Salbali Karimi, as saying Iran's cost of production stood $1-$1.5 per barrel, in a clear indication it would ramp up output in any price scenario.
Gulf producers and Russia have said they would not cut output even if prices fell to $20 per barrel.
On Friday, the International Energy Agency (IEA) said that the global supply glut was likely to deepen next year and put more pressure on prices.
OPEC supply is likely to increase by 1 million bpd next year, Morgan Stanley analysts said in a research note on Monday.
"Almost the entirety of added supplies in 2016 will come from Iran, Iraq and Saudi," it said.