Commodities

Oil rises as prospects for immediate supplies from Iran recede

Reuters TOKYO | Updated on June 15, 2021

Lifting of sanctions on Iran would allow the OPEC member to resume crude exports

Oil prices rose on Tuesday, with Brent gaining for a fourth consecutive session, as the prospect of extra supply coming to the market soon from Iran faded with talks dragging on over the US rejoining a nuclear agreement with Tehran.

Brent crude was up by 43 cents, or 0.6 per cent, at $73.29 a barrel by 0134 GMT, having risen 0.2 per cent on Monday. US oil gained 41 cents, or 0.6 per cent, to $71.29 a barrel, having slipped 3 cents in the previous session.

Indirect discussions between the US and Iran, along with other parties to the 2015 deal on Tehran's nuclear programme, resumed on Saturday in Vienna and were described as "intense" by the European Union.

A US return to the deal would pave the way for the lifting of sanctions on Iran that would allow the OPEC member to resume exports of crude.

It is "looking increasingly unlikely that we will see the US rejoin the Iranian nuclear deal before the Iranian Presidential Elections later this week," ING Economics said in a note.

Other members of the Organisation of Petroleum Exporting Countries (OPEC), along with major producers including Russia - a group known as OPEC+ - have been withholding output to support prices amid the pandemic.

"Additional supply from OPEC+ will be needed over the second half of this year, with demand expected to continue its recovery," ING said.

To meet rising demand, US drillers are also increasing output.

US crude production from seven major shale formations is forecast to rise by about 38,000 barrels per day (bpd) in July to around 7.8 million bpd, the highest since November, the US Energy Information Administration said in its monthly outlook.

Published on June 15, 2021

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