Oil price: oil remains stable on summer demand hopes but Iranian supply is looming
August Brent crude fell 24 cents, or 0.3%, to $ 73.27 a barrel at 12:55 p.m. GMT. U.S. West Texas Intermediate (WTI) crude for July was down 17 cents, or 0.2%, to $ 71.47.
Both benchmarks have risen in the past four weeks amid optimism about the pace of global COVID-19 vaccinations and the expected resumption of summer travel. The rebound pushed spot premiums for crude in Asia and Europe to multi-month highs.
“The underlying picture for physical oil demand remains positive,” said Jeffrey Halley, OANDA analyst. “Despite the noise in the financial markets, the real world is on the right track and will require more and more energy as it reopens.”
Bank of America said Monday that Brent crude is expected to average $ 68 a barrel this year, but could reach $ 100 next year due to rampant pent-up demand and increased use of passenger cars.
Negotiations to revive the Iranian nuclear deal were put on hold on Sunday after radical judge Ebrahim Raisi won the country’s presidential election.
Iranian and Western officials say Raisi’s rise to power is unlikely to change Iran’s negotiating position. Two diplomats said they expected a break of around 10 days.
“This will likely delay the return of Iranian oil to the market, but it is unlikely to derail the path to a deal,” said Bjarne Schieldrop, chief commodities analyst at SEB.
A deal could lead Iran to export an additional 1 million barrels per day, or 1% of global supply, for more than six months from its storage facilities.
Iran has increased the volume of crude it has stored on tankers in recent months, data intelligence firm Kpler said, in what could be preparations for a resumption of exports.
However, oil prices have been supported by forecasts of limited growth in oil production in the United States, giving the Organization of the Petroleum Exporting Countries (OPEC) more power to manage the market in the short term before a potentially large increase in shale oil production in 2022.