The price tumbled as much as 3 per cent during trading yesterday when it emerged Iraq had produced a record high of oil and may even raise output further.
The news comes as the market is already braced for more supply from Iran after sanctions were lifted.
Tankers have begun to leave Iran’s ports and it agreed its first deal with a European company last week with Greece’s refinery Hellenic Petroleum.
Some analysts expect Iran to increase production to between 3million and 4million barrels a day. Iraq’s fields produced more than 4.1million barrels a day.