International oil prices have rebounded significantly, mainly because the chances of countries resuming the Iran nuclear deal are slim, thus reducing the possibility of further increases in Iranian crude oil supply. In early European markets Tuesday, New York futures were trading at $59.99 a barrel, up 2.27%, while Brent futures were trading at $63.53, up 2.22%.
Talks between Iran, the U.S. and the rest of the participants in the 2015 nuclear deal aim to revive the deal, potentially clearing the way for the removal of sanctions on Iranian oil exports.
However, Warren Patterson, head of commodity strategy at ING Group, said a breakthrough on Iran is unlikely, and even if there is one, the market will be able to absorb a significant portion of the increased Iranian crude supply and still reduce inventories. Instead, the rebound of the new crown epidemic in certain regions means that price volatility could be quite high
In addition, Citi believes that OPEC+ (Organization of the Petroleum Exporting Countries and allies) is slowly resuming crude oil supply, meaning further inventory declines and tighter global markets in the second quarter. Because, as Saudi Arabia from next month only in three batches to resume production action, the global inventory decline is expected to be more than previously expected 700,000 barrels per day.
The bank’s analysts said the market should be tighter than previously expected given seasonal product demand and increased demand for crude from refineries.
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