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Global oil market continues to be oversupplied, which will be the main factor for the further fall in oil prices, despite the Middle East tensions, according to the global oil market analysts.

“The fact remains that global oil storage is near capacity and this will keep oil prices low,” Sam Barden, the director of Wimpole International, an energy market development company, told Trend.

Barden does not believe that the recent conflict between Saudi Arabia and Iran will trigger an increase in oil prices.

“I do not think the current Iran Saudi tensions will increase oil prices. I remain of the belief that we will see oil prices go below 25 dollars this year and we could see oil lows of 1999 when we saw 9-dollar oil,” Barden said.

Relations between Saudi Arabia and Iran soured after the execution of a prominent Shia cleric Nimr al-Nimr in the Kingdom. Iran strongly condemned the execution of Nimr al-Nimr, there were mass protests in the country, in particular, Saudi embassy in the capital Tehran and the consulate in the city of Mashhad were attacked.

Saudi Arabia broke off diplomatic ties with Iran on Jan 3.

Oil prices slid to an 11-year low on Wednesday under pressure from a strong dollar and weak Chinese data, as crude continues to suffer from a persistent supply glut.

Brent crude, the global oil benchmark, fell 4 percent to $34.95 a barrel on London’s ICE Futures exchange, the lowest intraday level since July 2004. On the New York Mercantile Exchange, West Texas Intermediate, the U.S. price gauge, was down 3.1 percent at $34.90 a barrel, according to The Wall Street Journal.

Meanwhile analysts at British economic research and consulting company Capital Economics believe that a sustained recovery in oil prices will have to depend on production cuts outside OPEC and on signs of stronger global demand.

These factors, rather than fresh disruption to supply from the Middle East, are the key factors behind their end-2016 forecast of $55 for a barrel of Brent.

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