LONDON, Sept 25: Oil prices sank below $60 on Monday, striking the lowest levels for more than six months as tensions eased over Iran and BP said it would resume output at the biggest US oil field, dealers said.

They later recovered some of the losses to trade slightly above $60.

New York's main contract, light sweet crude for delivery in November fell 15 cents to $60.40 per barrel in pit trading.

The contract had earlier plunged to $59.52 -- the lowest value since March 8 -- marking a fall of 24 per cent since its record high of $78.40, which was hit on July 13 as Israel bombed Lebanon.

In London on Monday, Brent North Sea crude for November delivery slid 35 cents to $60.06 per barrel in electronic trading after touching a low of $59.32 -- also last seen March 8.

“The market is looking scary ... it’s falling like crazy and people are bailing out of their positions,” said Tony Nunan, manager for energy risk management at Mitsubishi Corporation in Tokyo.

“The market seems to be bearish with the Iran situation looking like it’s reaching a compromise.”

Analysts warn that Iran, the world's fourth-biggest crude producer, could retaliate to economic sanctions by slashing exports, risking another surge in crude oil prices.

The market was also calmed on Monday after BP had said late last week that it would resume further output at Prudhoe Bay, the largest oil field in the US.

The closure of Prudhoe Bay early last month, due to a pipeline leak, sent Brent crude prices to a record high $78.64.

The field accounts for eight percent of total US crude oil production.

“BP said it would restore most of its shut-in output at the Prudhoe Bay oilfield in Alaska this week, ahead of a previous target of late October,” Sucden analyst Michael Davies said.—AFP