Oil prices rose on Wednesday after OPEC and its allies stuck to their plan to cautiously return oil supply in June and July while expecting fuel demand to rebound strongly during the U.S. summer.

US West Texas Intermediate (WTI) crude futures rose 32 cents, or 0.5 per cent, to $68.05, extending a 2.1 per cent gain following the Memorial Day holiday in the US on Monday. Prices rose to their highest since October 2018.

Brent crude futures climbed 37 cents, or 0.5 per cent, to$70.62 a barrel, after jumping 1.3 per cent overnight, when it hit its highest since March 8.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, together called OPEC+, agreed on Tuesday to keep to their plan to gradually ease supply curbs through July.

Saudi Energy Minister Prince Abdulaziz bin Salman’s comments after the meeting buoyed the market, saying he saw a solid demand recovery in the US and China, the world’s two biggest oil consumers, and added that the pace of vaccine rollouts “can only lead to further rebalancing of the global oil market”.

Also read: Brent hits $70 on demand prospects

“The market appears focussed on the more constructive outlook for later this year, with OPEC+ of the view that the market will see significant stock draw downs between September and the end of the year,” ING Economics analysts said in a note.

Including extra cuts by Saudi Arabia tapering off through July, the producer group will be returning 700,000 barrels per day (bpd) in June and 840,000 bpd in July, ING said.

Market gains over the past two weeks have been capped by concerns about a potential lifting of oil sanctions against Iran, as talks on reviving a nuclear accord made progress,however negotiations hit a roadblock this week.

Two Western diplomats and an Iranian official said the talks would likely pause on Thursday, but it was unclear if talks would resume before Iran’s June 18 presidential election.

“The delay is pushing the threat of another 2 million bpd of oil (returning to the market) to later in the year, when further economic growth should buffer its impact,” ANZ Research analysts said in a note.

OPEC Secretary General Mohammad Barkindo played down any potential disruption to the market, saying the group expected any return of Iranian exports “will occur in an orderly and transparent fashion” if and when a nuclear deal is reached.

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