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Oil jumps over 3% as fears of Iranian exports ease

CommoditiesMay 24, 2021 04:41PM ET
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© 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 Jessica Resnick-Ault

NEW YORK (Reuters) -Oil prices rose more than 3% on Monday as a demand bump fueled by COVID-19 vaccination drives gave traders optimism that the market can absorb any Iranian oil that would come on the market if Western talks with Tehran lead to the lifting of sanctions.

A decline in deaths due to COVID-19 in India also bolstered expectations that oil demand could rise in coming weeks.

Brent crude oil futures settled up $2.02, or 3%, at $68.46 a barrel, while July U.S. West Texas Intermediate ended at $66.05 a barrel, up $2.47, or 3.9%.

Prices also got a boost on expectations that a new deal with Iran is less likely than it was last week, said Bob Yawger, director of Energy Futures at Mizuho in New York.

"The Iranians and western powers cannot get the details worked out that will get this deal signed and delivered," Yawger said.

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.

Even if large volumes of Iranian crude return to the market, it 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.

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.

Oil jumps over 3% as fears of Iranian exports ease
 

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Comments (8)
Ernest Wong CA
Ernest Wong CA May 24, 2021 6:41PM ET
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up to $80 for Brent? Are they all in NOW??? LMAO
Siva Des
Siva Des May 24, 2021 1:32PM ET
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what makes them to think hitting $80 which we have not seen pre-COVID
Shane Weddle
Shane Weddle May 24, 2021 1:32PM ET
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Inflation
Ernest Wong CA
Ernest Wong CA May 24, 2021 1:32PM ET
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just cheap talks... I wonder if they are all in NOW at $68.5
Vlad Lozovskiy
Vlad Lozovskiy May 24, 2021 9:05AM ET
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Quit talking about Iran, Biden, open up Keystone pipeline project.
Barani Krishnan
Barani Krishnan May 24, 2021 8:29AM ET
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Iran-UN Monitor Pact Paves Way for Nuclear Deal Breakthrough - Bloomberg
Barani Krishnan
Barani Krishnan May 24, 2021 8:29AM ET
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The deadline for inspections has been extended by another month. They could easily go on extending, until the talks reach an agreement. This oil rally on Iran breakdown is BS.
Barani Krishnan
Barani Krishnan May 24, 2021 8:28AM ET
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Iran-UN Monitor Pact Paves Way for Nuclear Deal Breakthrough ["https://www.bloomberg.com/news/articles/2021-05-24/iran-says-it-s-extended-nuclear-pact-with-iaea-for-one-month"]
Barani Krishnan
Barani Krishnan May 24, 2021 8:21AM ET
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Goldman is still barking up that $80 tree
Hemant Sharma
Hemant Sharma May 24, 2021 6:22AM ET
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Right
perplexed76 .
perplexed76 . May 24, 2021 5:35AM ET
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ok the unknown storm is gone before being born, so oil gamblers invented another excuse
 
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