Oil prices could break below $20 this year as tensions rise between Iran and Saudi Arabia, two of the world's largest oil players, Again Capital founding partner John Kilduff said Monday.
"I think you're going to get as low as $18 and maybe get as high as $48. ... It's going to get really ugly," he told CNBC's "Squawk Box." "The Iranians doubled down again, if that's even possible, by saying that they could put 500,000 more barrels on the market within weeks after the sanctions get lifted."
Kilduff was referring to the anticipated lifting of sanctions related to Iran's nuclear program, which have locked the country out of international oil markets.
The world is currently oversupplied with 500,000 to 2 million barrels per day of oil. The glut could reach 3 million if Iran lives up to its vow to ratchet up exports to 1 million bpd as soon as possible.
The chances of Iran cooperating with top oil exporter and fellow OPEC member Saudi Arabia diminished following a diplomatic crisis that started with the Saudi execution of Shiite cleric Nimr al-Nimr this weekend and escalated rapidly. Iran's supreme leader, Ayatollah Ali Khamenei, said the Saudis would face "divine revenge," and Iranian protesters attacked the Saudi embassy in Tehran.
Saudi Arabia then cut diplomatic ties with its Gulf rival. Bahrain and Sudan also severed ties with Iran on Monday, while the United Arab Emirates said it would cut the number of Iranian diplomats allowed in the country. Saudi Arabia is the dominant Sunni Muslim power in the Middle East while Iran is led by Shiites.