Oil hits two-year high as doubts mount over Iranian market’s return business and economy news
Brent futures reached their highest level in two years, while West Texas Intermediate reached an all-time high in nearly three years.
Oil prices continued to rise on Wednesday amid signs of strong fuel demand in some economies, while the possibility of Iranian oil returning to world markets was questioned after the secretary of US state said sanctions against Tehran likely would not be lifted.
Global benchmark Brent crude futures rose 44 cents, or 0.6%, to $ 72.66 a barrel at 1:38 p.m. GMT, after hitting $ 72.83, the highest since May 2019.
US benchmark West Texas Intermediate (WTI) crude futures rose 30 cents, or 0.4%, to $ 70.35 a barrel. Earlier, they had made $ 70.62, the highest since October 2018.
“Multi-year supercharged oil prices reflect improving sentiment of demand for oil, and with it the expectation that crude and commodity inventories will be significantly reduced in the second half of 2021 as a new post-normal. pandemic in oil consumption is setting in, ”Rystad Energy oil markets analyst Louise Dickson said on Wednesday.
U.S. drivers are back on the road as COVID-19 restrictions are lifted and vaccination campaigns ramp up – catalyzing demand for crude.
“In the United States, demand for gasoline and diesel is increasing ahead of the summer driving season, which this year is seeing new momentum as it coincides with the successful vaccination campaign that has allowed the economy to open up and demand for oil to tick. higher, ”added Dickson.
The U.S. Energy Information Administration (EIA) on Tuesday forecast fuel consumption growth this year in the United States, the world’s largest user of oil, to be 1.49 million barrels per day ( bpd), up from a previous forecast of 1.39 million bpd.
In another bullish sign, industry data showed US crude oil inventories fell last week.
Price gains had been capped in recent weeks, with oil investors speculating that sanctions on Iranian exports would be lifted and that oil supply would increase this year as Tehran’s talks with the United States on relaunching the economy. Iranian nuclear pact, known as the Joint Comprehensive Plan of Action (JCPOA), advanced.
But on Tuesday, US Secretary of State Antony Blinken questioned the prospects of imminent relief for Iran’s oil sector after telling a US Senate committee: “I would expect that even if I returned for compliance with the JCPOA, hundreds of sanctions will remain in place, including sanctions imposed by the [President Donald] the Trump administration. If they are not incompatible with the JCPOA, they will remain so until Iran’s behavior changes.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC +, has not indicated whether it will stick to supply restrictions beyond July.
OPEC Secretary General Mohammad Barkindo recently said OPEC + expects further decline in stocks in the coming months.