Oil prices rose by 2 per cent early on Monday, buoyed by market expectations that fuel demand globally is rising with the re-opening of major economies in Europe and higher travel numbers in the United States. As of Monday, WTI was up 2.14 percent at $64.95 and Brent Crude had risen by 2.02 per cent at $67.79. Earlier in Asia trade, oil prices were rising by more than 2.5 percent, after Iran said over the weekend that its three-month agreement with the International Atomic Energy Agency (IAEA) for monitoring nuclear activities had ended and the agency would not have access to data collected from cameras inside Iranian nuclear facilities.
Meanwhile Goldman Sachs still expects crude oil to rise to $80 per barrel by the end of the year despite reports about progress on U.S.- Iranian talks about the lifting of sanctions. According to a note released by the bank’s analysts, the recovery in demand made possible by mass vaccinations will offset the effect of additional supply volumes from Iran. ”The case for higher oil prices therefore remains intact given the large vaccine-driven increase in demand in the face of inelastic supply,” Goldman analysts said.
Last week, Iranian President Hassan Rouhani said that “the main agreement” on the lifting of the U.S. sanctions had been reached. The U.S. and Iran have been holding indirect talks in Vienna since last month on possible ways for both countries to return to the deal. U.S. President Joe Biden has signalled a willingness to return to the nuclear deal, but only if Iran returns to full compliance in its nuclear activities. Even before that, in April, Goldman analysts were talking about Brent crude hitting $80 per barrel later this year in what they said would be the biggest demand jump ever.
“From May 22 and with the end of the three-month agreement, the agency will have no access to data collected by cameras inside the nuclear facilities agreed under the agreement,” Iran’s semiofficial Fars news agency quoted Mohammad Baqer Qalibaf as saying, Radio Free Europe reported. Oil prices rose on this news early on Monday, as the market was thinking about the narrowing window for the global powers to reach an agreement for the return of Iran and the United States to the nuclear deal. Later on Monday, however, the IAEA issued a press release that its Director General Rafael Mariano Grossi had agreed with Iran to extend by one month to June 24 the necessary verification and monitoring activities carried out by the agency in the Islamic Republic.
“The expiration of the Technical Understanding, which enabled the Agency’s verification and monitoring, would have been a serious loss at this critical time,” Grossi said. “This agreed way forward ensures continuity of knowledge for a limited period of time.” Meanwhile, the U.S. Transportation Security Administration (TSA) reported 1,863,697 traveler throughput at American airports on May 23, the highest number since the pandemic started grounding flights in March last year. Higher demand for travel and acceleration of vaccinations in Europe are set to result in “the biggest jump in oil demand ever, a 5.2 million barrels per day (bpd) rise over the next six months,” Reuters quoted Goldman Sachs as saying in a late April note to clients. According to the investment bank, even the spike in new Covid-19 infections in parts of Asia and the continuing increase in new cases in India would not affect the immediate outlook for oil prices.
Crude oil price.com