U.S. crude oil futures prices rose to their highest in more than two-and-a-half years after the Organization of the Petroleum Exporting Countries and Partners (OPEC+) forecast a tightening of the global oil market. as efforts to restore the nuclear deal with Iran have yet to make a breakthrough.
At the end of last week, the price of US light sweet crude (WTI) rose by 3.8% to $68.87/barrel. While the price of Brent oil in London reached 70 USD/barrel. This is the highest level since 2019.
According to an assessment from OPEC+, oil prices rose sharply when the excess oil supply during the pandemic was no longer available, while crude oil inventories are expected to decline rapidly in the second half of this year.
Meanwhile, traders continue to monitor progress in negotiations between Tehran and world powers to revive the 2015 nuclear deal. The country said it hopes to fully activate the deal by August.
Mr. John Kilduff - member of Again Capital LLC - said that OPEC is considering tightening supply while the situation in Iran is still difficult. "All are very optimistic amid rising oil demand, except for the Indian market," he said.
OPEC+ is at an impasse over plans to increase oil production in July as Saudi Arabia’s Energy Minister is optimistic about a global recovery. Accordingly, the alliance will increase 841,000 bpd in July after increasing in May and June.
The strong economic recovery in the US and Europe gives OPEC+ confidence the market can absorb this extra boost. Although the rise in Covid-19 cases in some Asian countries is threatening demand here, OPEC+ sees oil inventories in these countries falling by at least 2 million barrels per day in the period from September. to December. Therefore, the later the deal with Iran is signed, the greater the possibility that the global oil market will tighten in the summer.
Speaking at the OPEC+ meeting on June 1, Saudi Energy Minister Prince Abdulaziz bin Salman said: "The picture of oil demand has shown signs of improvement."
Sharing the same view, his counterpart in Russia also said that the economy is recovering gradually.
Earlier, Mr. Fatih Birol - Executive Director of the International Energy Agency (IEA) - said that without more supply, oil prices will increase even more.
“In the event that OPEC policies do not change, with the strong growth of the US, China and Europe, the gap between supply and demand in the oil market will widen,” Birol said.
Speaking to Bloomberg , Mr. Fereidun Fesharaki - President of industry consulting firm FGE - forecast: The market fundamentals are very strong and oil prices could rise to $80/barrel by the middle of the third quarter when there is no supply. from Iran.
