🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

Oil rises as Iranian supply not seen returning soon

Published 08/06/2021, 02:22
Updated 08/06/2021, 22:41
© Reuters. FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016.  REUTERS/Nick Oxford/File Photo
CBKG
-
LCO
-
CL
-

By Stephanie Kelly

NEW YORK (Reuters) -Oil prices rose on Tuesday, settling at the highest in more than two years after the top U.S. diplomat said that even if the United States were to reach a nuclear deal with Iran, hundreds of U.S. sanctions on Tehran would remain in place.

That could mean additional Iranian oil supply would not be re-introduced into the market soon.

"I would anticipate that even in the event of a return to compliance with the JCPOA (2015 Joint Comprehensive Plan of Action), hundreds of sanctions will remain in place, including sanctions imposed by the Trump administration," U.S. Secretary of State Antony Blinken said.

Brent crude rose 73 cents, or 1%, to close at $72.22 a barrel, the highest it has settled since May 2019. U.S. West Texas Intermediate oil rose 82 cents, or 1.2%, to settle at $70.05 a barrel, highest since October 2018.

"Blinken is looking at the reality of the situation and saying even if we do get a deal, there’s a long way to go," said Phil Flynn, senior analyst at Price Futures Group in Chicago. "All those people expecting a flood of oil are going to be disappointed."

The United States told Iran on Tuesday that it must let the U.N. atomic agency continue to monitor its activities, as laid out in an agreement that has been extended until June 24, or put wider talks on reviving the Iran nuclear deal at risk.

Barriers to the revival of Iran's nuclear deal remain ahead of talks due to resume this week between Tehran and world powers, four diplomats, two Iranian officials and two analysts told Reuters.

Futures were pressured by data showing China's crude imports were down 14.6% in May from a year earlier.

Crude prices have risen in recent weeks, with Brent up by nearly 40% this year and WTI even more on expectations of demand returning as some countries vaccinate populations against COVID-19.

Restraint on supply by the Organization of the Petroleum Exporting Countries and allies has also buttressed prices.

U.S. crude oil production is expected to fall by 230,000 barrels per day (bpd) in 2021 to 11.08 million bpd, the U.S. Energy Information Administration (EIA) said, a smaller decline than it forecast last month.

U.S. crude inventories fell by 2.1 million barrels last week, two market sources said after settlement, citing American Petroleum Institute figures. Gasoline inventories rose by 2 million barrels and distillate stocks climbed by 3.8 million barrels.

© Reuters. FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016.  REUTERS/Nick Oxford/File Photo

"The fundamental environment on the oil market remains favourable: fuel demand is recovering strongly not only in the United States, but also in Europe following the (partial) lifting of restrictions," Commerzbank (DE:CBKG) said.

Some still question the demand recovery's trajectory. For instance, some doubt Britain, one of the most vaccinated countries in the world, will lift all restrictions as previously planned on June 21.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.