• UBS Chairman says lifting of Iran sactions adds new supplies
  • IEA has warned oil market could `drown in oversupply' in 2016

Crude oil prices may drop further as world powers lift sanctions on Iran and production in the Islamic Republic ramps up, UBS Group AG Chairman Alex Weber said in an interview.

“I don’t see a bottoming out of oil prices -- and a re-spiking -- anytime soon,” Weber told Bloomberg Television’s Francine Lacqua and Hans Nichols at the World Economic Forum in Davos, Switzerland. “The lifting of Iran sanctions, in my view, will continue to add supply.”

Iran’s oil ministry issued an order earlier this week to increase production by 500,000 barrels a day as the country moved ahead with plans to add supply to a glutted market even at the risk of contributing to a price collapse.

Buyers of Iranian crude are free to import as much of its oil as they want after the International Atomic Energy Agency determined that the country had curbed its ability to develop a nuclear weapon.

Weber added his voice to a growing consensus in Davos -- and the oil industry -- that crude prices will stay lower for longer. Brent crude, the global benchmark, slipped to $27.67 in intraday trading Monday, its lowest since 2003. Glencore Chairman Tony Hayward said in an interview on Tuesday oil prices weren’t likely to recover for some time, saying the market was seeing a "supply shock".

Brent futures were down 60 cents to $28.16 a barrel at 7:42 a.m. in London. The benchmark has fallen 41 percent over the last year.

The International Energy Agency on Tuesday said "the oil market could drown in oversupply," pushing prices down further. The Paris-based organization cited a potential demand slowdown from the mild Northern Hemisphere winter and Iran’s return to the energy market.

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