Oil Bulls Reign, on Iranian Hard-Line Leader’s Victory

Oil bulls affirmed their grip on the energy market after macros showed a substantial pause on the resumption of supplies from Iran who sits upon 13% of global oil reserves.

At the time of filing this report, the British based oil contract, Brent crude futures posted gains of about 0.4% to trade near $74 a barrel while U.S. West Texas Intermediate futures traded near $72 a barrel, posting gains of about 0.5%.

Both major crude oil benchmarks have recorded four straight weekly gains amid soaring demand, continued supply controls by OPEC+ and U.S. shale producers suggest crude oil use is recovering fast, and nearly at pre-COVID-19 pandemic levels.

Negotiations to resuscitate the Iran nuclear deal went tough on Sunday, as macros revealed Ebrahim Raisi, a hardliner, placed on U.S sanctions won the Iranian presidential election, further added more complexity amid reports on the removal of such sanctions imposed on its leader before any agreement is reached.

Price patterns show oil bulls had earlier been under intense pressure in the early part of 2021 amid reports that a nuclear deal was imminent and Iranian oil would soon flood the fragile oil market with the third wave of COVID-19 hitting hard at key oil buyers like India and Japan.

Still, market pundits predict, pending crude oil supplies from Iran can easily be absorbed by the growing thirst for energy as social mobility and air travels rebound strongly on growing sentiments that energy demand will outstrip supply by as much as 1.5 million barrels a day by the end of this year.