Oil prices were up nearly 2% during the week ending June 11 from positive demand forecasts that pushed prices to record highs although investors are still cautious on the outcome of talks between the US and Iran, which could see more Iranian oil on the market.
International benchmark Brent crude traded at $72.74 at 1100 GMT on Friday, posting more than a 1.99% increase from Monday when trade at 0609 GMT registered at $71.32 per barrel.
American benchmark West Texas Intermediate (WTI) traded at $70.55 at the same time on Friday, rising over 1.99% relative to $69.17 a barrel on Monday.
The oil market started the week amid supply concerns ahead of the upcoming sixth round of talks between the US and Iran in Vienna on Saturday.
Just three days before the talks, the US announced that it lifted a slew of sanctions aimed at Iran's energy industry, the results of which could see Iran supplying oil with fewer restrictions.
Antony Blinken, US secretary of state, said in a statement that the US was lifting sanctions on three former Iranian government officials and two companies previously involved in the Iranian petrochemical sector as a result of “a verified change in status or behavior on the part of the sanctioned parties”.
The sanctions lifted were not oil-sector related, but signal an “increased likelihood of a deal, and thus more potential risk of bearish oil price fundamentals over the next few months,” said Rystad Energy’s Oil Markets Analyst Louise Dickson.
“An earlier-than-expected Iran deal would hasten the return of the nearly 1 million bpd of Iranian barrels, perhaps as swiftly over 4 months. This would certainly be a mini supply shock to the still fragile oil market, but not one that can’t be absorbed by the improving demand backdrop,” she added.
The week ending June 11 has also witnessed new records for oil prices. Brent reached its highest level since May 2019 at $72.93 a barrel on Thursday. Likewise, WTI attained $70.80 a barrel, hitting the highest level since October 2018.
The optimistic projections by both the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) over a quicker oil demand recovery supported higher prices.
Keeping their previous estimates unchanged, they forecast a surge in oil demand by 6% in 2021, particularly in the second half of the year.
While the IEA expects that global oil demand will return to pre-pandemic levels by the end of 2022, OPEC said positive mobility developments on the back of easing restriction measures and border openings across the region encouraged an upward revision to the second-quarter data.
By Sibel Morrow