Asian stocks started down on the third week of the year on Monday, after Iran said it is ready to boost oil production by an initial 500,000 barrels per day after economic sanctions were lifted, pushing oil prices to their lowest since 2003. Japan's Nikkei 225 slumped 1.8 percent and Korea's KOSPI fell 0.6 percent.  Singapore's STI dropped 1.6 percent, and Malaysia's KLCI 0.9 percent. Australia's ASX 200 fell 0.9 percent and New Zealand's NZX 50 was down 1.8 percent. Stocks in Shenzhen were off by 3.5 percent.

Iran made the announcement on Sunday, after the U.S. officially loosened sanctions following Iran's agreement to curtail its nuclear program. The amount is about half of the cut the country made after the U.S. tightened sanctions in 2012, according to the Wall Street Journal. While it could take months to sign contracts with some nations, some of the additional output could be sold to China and other Asian countries immediately, the Journal said.

Brent, the global crude oil benchmark, fell $1.14 to $27.80 in Asian trading on Monday, Reuters said. Oil prices fell below $30 last week and below $40 in early December from over $100 in mid-2014 as China's economic growth slowed, U.S. production surged and Saudi Arabia refused to cut output.

“Commodities are likely to dominate today with oil breaking below $30 a barrel last week and news at the weekend that Iran has met conditions to lift sanctions, pushing more supply on to the market,” said Mark Smith, a senior economist in Auckland at ANZ Bank New Zealand Ltd., as reported by Bloomberg.

"The biggest focus is oil prices. Oil producing countries have to sell their assets to finance their budget gaps. They are selling shares around the world," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, as reported by Reuters.

The deepening slowdown in China, the world's second-biggest economy and long one of the main drivers of global economic growth, has roiled the country's financial markets, forcing two shutdowns in the first week of the year, which sent ripples around the world. China stocks are off 18 percent this year.

“China’s financial markets and global equities are likely to keep the risk-off sentiment alive this week,” ANZ's Smith said.