Oil futures rally as Iran-IAEA deal expires, demand rebounds

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Iran has steadily reduced its compliance with the nuclear deal, saying its measures were justified in response to the United States’ withdrawal from the 2015 Joint Comprehensive Plan of Action in 2018.

Oil markets were rocked last week by an apparent breakthrough in multilateral talks in Vienna, with Iranian President Hassan Rouhani declaring on May 20 that the “main deal” had been reached, with the United States pledging to lift the negotiations. sanctions targeting Iranian oil and petrochemicals. and shipping. If a deal is struck, S&P Platts estimates Iranian crude and condensate exports would rise from 800,000 barrels per day (b / d) in April to 1.4 million b / d in December and 2 million b / d in July 2022.

According to the monthly survey of the Organization of the Petroleum Exporting Countries, Iran’s production stood at 2.43 million b / d in April – an increase from around 2 million b / d at the late 2020, as Iran saw increased buying interest from China, according to market sources. .

However, investment bank Goldman Sachs expects OPEC and its Russian-led allies to offset a planned ramp-up by halting its monthly rate of 500,000 bpd production increase for two months. in the second half of 2021, leaving “the destocking trajectory unchanged for a single modest slowdown in the rate of normalization of its overcapacity.”

“Our updated baseline scenario is that the resumption of Iranian production will start in October (earlier forecast in June 2022), reaching 3.5 million barrels per day (mb / d) after six months,” the house said. Wall Street investment. Goldman Sachs still expects Brent to hit $ 80 per barrel (bbl) this summer, due to a widespread upturn in economic activity and mobility in the US and Europe.

In foreign markets, the US dollar hovered near its three-month low, trading 89.885 against a basket of foreign currencies, with investors considering the release of data on US personal consumption spending on Friday – a measure of preferred inflation for the US Federal Reserve. Market consensus calls for the April PCI index to fall 14.8% from the March stimulus which inflated the peak to 21.1%. Personal consumption spending, after rising 4.2% in March, is expected to rise another 0.6% in April.

Early in trading, NYMEX July West Texas Intermediate gained $ 0.93 to trade near $ 64.52, and international benchmark Brent contract for July delivery rose $ 0.97 to 67.42 $, parrying the winnings after a night rally. NYMEX June RBOB futures jumped 2.99 cents to 2.0984 gallons, while ULSD June futures gained 2.12 cents to 2.0094 gallons.

Liubov Georges can be reached at [email protected]

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