Oil prices rallied this Monday, as Covid-19 eases around the world; specifically in India, and expectations for greater demand recovery increase, Reuters reported.
Firstly, Brent crude oil futures rose to $2.02, or 3%, at $68.46 a barrel during the early trading session; while July U.S. West Texas Intermediate (WTI) ended at $66.05 a barrel, up $2.47, or 3.9%.
Secondly, prices of oil also got boosted after possibilities for the Iranian deal faded away. Last Week, news broke about the reviving of the Iranian nuclear deal that would add more oil supply to the markets.
Nevertheless, such agreement couldn’t come to fruition. This week Iran is less likely to secure a deal than the last, as western power couldn’t get the details done. Bob Yawger, director of Energy Futures at Mizuho in New York, said it quoted by Reuters.
Thirdly, he remarked that, “the Iranians and western powers could not get the details worked out that will get this deal signed and delivered.”
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Oil prices will jump to $80 by 4Q 2021
Moreover, Reuters reported on Sunday that, the speaker of Iran’s parliament said a three-month monitoring deal between Iran and the U.N. nuclear watchdog had expired; and that its access to images from inside some Iranian nuclear sites would cease.
In addition, both sides declared that the monitoring agreement would be extended for a month; consequently, delaying further talks.
Nevertheless, even if more Iranian oil flooded the market, it is unlikely to stall the drawdown in global oil stocks. Stephen Brennock of oil broker PVM, said to Reuters. “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.”
Moreover, Goldman Sachs said the case for higher oil prices remains intact. In addition, it foresaw an additional increase for oil prices for next summer, to $80 per barrel.
Finally, the agency remarked. “Even aggressively assuming a restart in July, we estimate that Brent prices would still reach $80 per barrel in fourth quarter 2021.”