Oil price to fall further on over-supply: IEA

Paris - The oil price is set to fall further this year as supply vastly exceeds demand, with major oil exporter Iran's return to the market offsetting any production cuts from other countries, the International Energy Agency (IEA) said on Tuesday.

"Can it go any lower?" the IEA  asked in its monthly oil market report. "Unless something changes, the oil market could drown in over-supply. So the answer to our question is an emphatic yes. It could go lower."

The oil price this week hit lows not seen in 12 years, and is currently trading at or below $29 dollars per barrel.

Iran's return to the oil market, the main reason for continued price weakness, has probably not been fully factored into prices yet, the IEA warned, contradicting many financial analysts.

Iran is facing "the not inconsiderable challenge" of finding buyers willing to take more oil into an already glutted market, the IEA said.

"However, if Iran can move quickly to offer its oil under attractive terms, there may be more 'pricing in' to come," it said.