Brent crude oil price edged higher to $71.88 a barrel after the top U.S. diplomat said that even if the United States were to reach a nuclear deal with Iran, hundreds of U.S. sanctions on Tehran would remain in place. This is a healthy development for the Nigerian economy as it would boost the nation’s revenue and foreign exchange earnings. The unfolding development could mean additional Iranian oil supply would not be re-introduced into the market soon. “I would anticipate that even in the event of a return to compliance with the JCPOA (Joint Comprehensive Plan of Action), hundreds of sanctions will remain in place, including sanctions imposed by the Trump administration,” U.S. Secretary of State Antony Blinken.
Brent crude rose 39 cents to $71.88 a barrel, a 0.6% gain. U.S. West Texas Intermediate oil rose 51 cents to $69.74 a barrel. “Blinken is looking at the reality of the situation and saying even if we do get a deal, there’s a long way to go,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “All those people expecting a flood of oil are going to be disappointed.” Barriers to the revival of Iran’s nuclear deal remain ahead of talks due to resume this week between Tehran and world powers, four diplomats, two Iranian officials and two analysts said. In China, data showing China’s crude imports were down 14.6% in May on a yearly basis weighed on futures. Crude prices have risen in recent weeks, with Brent up by nearly 40% this year and WTI gaining even more, amid expectations of demand returning as some countries succeed in vaccinating populations against COVID-19. Restraint on supply by the Organization of the Petroleum Exporting Countries and allies has also helped buttress prices.
Meanwhile, U.S. crude inventories have been drawing down and were forecast to drop for a third straight week, analysts said in a poll ahead of industry data from the American Petroleum Institute at 4:30 p.m. EDT (2030 GMT), followed by the government’s report on Wednesday. “The fundamental environment on the oil market remains favourable: fuel demand is recovering strongly not only in the United States, but also in Europe following the (partial) lifting of restrictions,” Commerzbank said. There are still questions about the demand recovery’s trajectory. In Britain, one of the most vaccinated countries in the world, there are now doubts that the country will lift all coronavirus-related restrictions as previously planned on June 21.