On A Bull Run, Crude Oil Faces Uphill Battle With Iran
The oil markets enjoyed a flurry of activity on Monday, continuing their week-long gains. While economies recover from COVID-19, supply restraints from major producers collide with growing fuel demand.
In the past week, Brent oil futures gained almost 4%, in the past week but rose 1.34% this week to trade above $84 a barrel, . The WTI futures price made its highest closing price since late 2014 at $81 a barrel, a jump of 1.93%. The global benchmarks were both over $80 a barrel.
In exchange for goods or capital investment in Iran’s sanctions-hit energy sector, Iran said over the weekend that it will offer oil and gas condensate to “any buyer.”
Natural gas and crude oil are abundant in Iran. As of last year, Iran’s oil reserves accounted for 25% of Middle Eastern oil reserves and 12% of global oil reserves
On state television, Javad Owji said the ministry is open to receiving investments, either foreign or domestic, in exchange for oil or condensate. He said lawmakers were presented with the plans on Sunday and were waiting for their approval.
Those developments come despite stalling talks to get an international deal on Iran’s nuclear program, which would allow it to start exporting oil again, suggesting the bulls may be tamed from reaching $100 a barrel at least for the time being.
Despite expectations for stronger demand, as supply is limited, crude prices are likely to float as demand remains limited and a seven-week rally in oil’s price is expected.
During Europe and Asia’s cold weather, coal and natural gas prices are soaring as stockpiles run low, prompting a switch to oil-based products like diesel and kerosene.
The increase in fuel demand has driven prices higher as more people come out of lockdown, including Sydney, Australia, which emerged from a 107-day lockdown. WTI futures have gained seven consecutive weeks, while Brent futures have gained five.
On the meeting of OPEC+ last week, it was decided that production would continue to increase steadily and gradually.