Iran on Monday, January 18 ordered as planned an increase in its oil production of 500,000 barrels per day following the lifting of sanctions under its nuclear deal with world powers, AFP reports.

"With the removal of sanctions, Iran is ready to increase production by 500,000 bpd and today this order was issued," Rokneddin Javadi, the head of the National Iranian Oil Company and the deputy oil minister, said in a statement.

Iran currently produces 2.8 million barrels per day and exports just over one million barrels.

Tehran had previously announced plans to increase production by half-a-million barrels after the lifting of international sanctions, and by another 500,000 bpd six months later.

The nuclear agreement came into force on Saturday, allowing the United States and the European Union to end sanctions against Iran, including against oil exports.

"The biggest problem on the oil market now is the 2 million bpd surplus that has driven down oil prices," Javadi said, AFP says.

But he said Iran still needed to raise production.

"If Iran doesn't increase its oil production, neighboring countries may in the next six to 12 months increase their production and take up Iran's share," he said.

Concerns that fresh Iranian exports will worsen a supply glut have helped push oil prices to 12-year lows, and they plunged below $28 a barrel early on Monday.