Oil prices took a leap yesterday, gaining on a pause over talks to end United States’ sanctions on Iranian crude, and as the dollar retreated from two-month high.
Brent crude oil for August gained $1.24, or 1.7 per cent to $74.74 a barrel while the US West Texas Intermediate (WTI) crude for July rose $1.94, or 2.7 per cent to $73.59.
Both benchmarks have risen for the past four weeks on optimism over the pace of global COVID-19 vaccinations and expected pick-up in summer travel.
The rebound has pushed up spot premiums for crude in Asia and Europe to multi-month highs.
Bank of America said that Brent crude was likely to average $68 a barrel this year but could hit $100 next year on unleashed pent-up demand and more private car usage.
Oil was boosted by a weaker US dollar which can send speculative investors into greenback-denominated assets like commodities.
Equally, negotiations to revive the Iran nuclear deal took a pause on Sunday after hardline judge Ebrahim Raisi won the country’s presidential election.
A deal could lead to Iran exporting an extra one million barrels per day, or 1 per cent of global supply, for more than six months from its storage facilities.
Iranian and Western officials say Raisi’s rise is unlikely to alter Iran’s negotiating position. Two diplomats said they expected a break of about 10 days.
Additionally, oil prices have drawn support from forecasts of limited growth in US oil output, giving the Organisation of the Petroleum Exporting Countries, OPEC, more power to manage the market in the short term before a potentially strong rise in shale oil output in 2022.