Oil prices rise over $1 as demand set to absorb new Iranian supply

imageCommodities1 hour ago (May 24, 2021 10:36AM ET)

(C) Reuters. FILE PHOTO: A closed petrol pump is seen in Chuquiaguillo, on the outskirts of La Paz, Bolivia, November 17, 2019. REUTERS/David Mercado

By Noah Browning

LONDON (Reuters) -Oil prices rose on Monday as a demand bump fuelled by COVID-19 vaccination drives was increasingly seen as sufficient to absorb Iranian oil released back onto the market if Western talks with Tehran lead to the lifting of sanctions.

Brent crude oil futures for July were $1.56, or 2.4%, higher at $68 a barrel by 1420 GMT, while July U.S. West Texas Intermediate was at $65.19 a barrel, up $1.61, or 2.5%.

Goldman Sachs (NYSE:GS) said the case for higher prices remained intact even with a potential increase in Iranian exports. Its new base case for an October restart still supports an $80 per barrel forecast for this summer, it added.

“Even aggressively assuming a restart in July, we estimate that Brent prices would still reach $80 per barrel in fourth quarter 2021,” the bank said in a note.

Iran and the U.N. nuclear watchdog are extending a recently expired monitoring agreement by a month, both sides said on Monday, avoiding a collapse that could have pitched wider talks on reviving the 2015 Iran nuclear deal into crisis.

Former President Donald Trump withdrew the United States from the deal in 2018 and re-imposed sanctions.

“An aggressive ramp up in Iranian production and exports is unlikely to stall the drawdown in global oil stocks,” said Stephen Brennock of oil broker PVM.

“Additional supply from Tehran is poised to be absorbed by the market as a result of a vaccine-spurred surge in demand over the coming months,” he added.

Oil prices rise over $1 as demand set to absorb new Iranian supply

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.