LONDON: Oil prices fell further Monday on worries about China's growth slowdown and a supply glut, but analysts said tensions between producer giants Iran and Saudi Arabia could lend some support.
Around midday in London, Brent North Sea crude for delivery in February stood at $32.87 a barrel, down 68 cents from Friday's closing level.
US benchmark West Texas Intermediate for February dipped 45 cents to $32.71 per barrel.
The oil market plunged by ten percent last week, striking 12-year lows, hammered also by concerns about China, the world's biggest energy consumer, which overshadowed a strong US jobs report.
"Oil prices are starting the new week of trading noticeably down," said Commerzbank analyst Carsten Fritsch.
"Brent and WTI have fallen to well below $33 per barrel and as such are once again nearing the 12-year lows they recorded last week."
Oanda analyst Craig Erlam added the market could soon breach the key psychological barrier of $30, beset also by the strong dollar.
The rising greenback makes dollar-priced crude more expensive for buyers using weaker currencies.
That tends to dent global oil demand and hurt price levels.
"All fundamental factors seem to put lower for crude, be it oversupply, the slowdown in China leading to falling demand, and the stronger dollar.
"The case against crude falling below $30 appears pretty weak at this stage, especially when geopolitical risks are being so overlooked."
Simmering geopolitical risks in the oil-rich Middle East tend to send oil prices spiking on worries about supplyside risks.
However, the ongoing row between top OPEC producer Saudi Arabia and fellow member Iran has helped push prices lower, as traders bet the cartel was now less likely to cut output.
Sanjeev Gupta, head of the Asia-Pacific Oil and Gas practice at professional services organisation EY in Singapore, argued that prices could win support in the coming weeks from the Middle East tensions.
"Rising tensions between Saudi Arabia and Iran could support the upswing of oil prices in the short term," he said.
But Gupta cautioned that oil markets would be closely tracking new economic data from Europe and China, and "further signs of a slowdown will put further downward pressure on the price of crude".
On Sunday, top Arab diplomats rallied behind Saudi Arabia in a dispute with Iran that has th reatened to derail efforts to resolve Middle East conflicts including the war in Syria.
The row between the two major oil producers erupted on January 2 after Saudi Arabia executed a prominent Shiite cleric along with 46 others on terrorism charges.
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