Crude oil prices rose sharply in the session on June 21 on signals of negotiations to end US sanctions on Iranian crude oil, and the dollar left a two-month high.
|Oil prices rose sharply as the dollar weakened and supply tightened.|
Closing the session, the price of Brent oil for August delivery rose 1.9% to $74.90 per barrel. U.S. WTI crude for July delivery rose 2.8% to $73.66.
Both crudes have gained over the past four weeks on optimism about the pace of global COVID-19 vaccinations and an expected increase in summer travel. The recovery pushed spot prices for crude in Asia and Europe to multi-month highs.
Oil prices were also boosted by a weakening greenback, making crude cheaper for buyers in other currencies.
Bob Yawger, director of Energy Futures in Mizuho (New York, USA), said that the increase was due to signals from the negotiations on the Iran nuclear deal. The signal sent shows that Washington is not easy to give up sanctions and even Iran has shown a tough attitude, showing that it does not need the lifting of US sanctions.
The expert said that the hardline election in Iran is weighing on market supply as sanctions appear less likely to be lifted.
If an agreement is reached between the US and Iran, the market will likely be supplied with an additional 1 million barrels of oil per day from Iran, equivalent to 1% of global supply. The supply level will be able to last for 6 months. But the fact that the agreement was not reached has kept the supply intact and the impact from the greenback and the vaccine has caused demand to increase sharply and oil prices have increased.
Earlier, it was reported that the increase in oil prices was due to the context that OPEC + countries were complying with the terms of the agreement and the prospect of reaching an agreement on Iran’s nuclear program was uncertain. The expectation of a face-to-face meeting between the leaders of Russia and the US – Vladimir Putin and Joe Biden – taking place on June 16 in Geneva has positively impacted the price of black gold.
However, experts note that the increase in the valuation index is most likely a temporary phenomenon and is influenced by news, Sputnik commented.
Meanwhile, Bloomberg believes that another equally important factor is Russia, which is currently considering the OPEC+ group’s proposal to increase oil production at its meeting next week. The country sees supply in the market as being in short supply, officials familiar with the matter told Bloomberg.
Two officials said Moscow expects the current global oil output deficit to persist in the medium term and it wants to pump more oil out.
Unlike its partner Saudi Arabia, Russia is often a supporter of increasing oil production. The country’s key oil producers earlier this month said OPEC+ needs to continue to increase output to meet additional global demand.
Russian Deputy Prime Minister Alexander Novak will meet with the main producers in the country to discuss the market situation, preparing for the meeting of the OPEC + group on July 1.
The prospect from OPEC+ can make the oil market cool down and countries with large, easy-to-exploit oil resources like Russia will become the winners.
The International Energy Agency earlier this month urged OPEC and its allies to begin tapping production capacity to meet rapidly recovering market demand.
Goldman Sachs estimates the market is in a 3 million bpd deficit due to a lack of meaningful output growth from Iran, OPEC and shale suppliers.
In a related development, the US Central Bank said that the price of Brent crude oil is likely to average $68 a barrel this year but could reach $100 next year due to the continued increase in demand and the use of crude oil. more personal car use.