Oil prices dropped Monday as Iran and global powers appeared close to a historic deal that would loosen sanctions in exchange for curbs on Tehran's nuclear program.

Sanctions have long reined in Iran's oil production and exports, and the country is eager to shed those restrictions to boost its all-important energy sector.

Crude prices dropped by 1.6% to around $52 a barrel as investors reacted to the potential new supply.

Iran has plenty of oil it can export the minute a deal is signed -- there are an estimated 30 million barrels of crude in storage, according to FACTS Global Energy, an industry consultancy. An agreement could also pave the way for new foreign investment by international oil and gas giants like Royal Dutch Shell and France's Total.

The potential flood of Iranian crude has scared global markets, and pushed the International Energy Agency to lower its oil price forecast.

"Tehran has made clear its intention to lift exports as soon as the ink dries on an accord," the International Energy Agency wrote in its monthly report published July 10. "The bottom of the market may still be ahead."

Crude oil prices already fell to their lowest point in almost three months early July, pressured by rising global supply and financial turmoil in Greece and China.

Related: Oil prices dive below $51 as Iran deal looms

Iran and the West reached a framework for a deal in April. Since then, a deadline for a full agreement have been extended multiple times, though diplomats have said that a final deal could come as early as Monday.