Oil Prices Jump 3% as Problem Emerges from Iranian Nuclear Deal

By Adedapo Adesanya

Oil prices jumped more than 3 per cent on Monday as a possible problem emerged from the renewed talks on the 2015 Iran nuclear deal that could add more oil supply to the market.

As a result, the Brent crude rose $2.01 or 3.01 per cent to $68.44 per barrel while the West Texas Intermediate crude increased by $2.39 or 3.76 per cent to sell at $65.97 per barrel as at the time of compiling this report.

Oil prices had plunged last week after Iran’s president, Mr Hassan Rouhani, said the United States was ready to lift sanctions on his country’s oil, banking and shipping sectors.

However, The Speaker of Iran’s parliament said on Sunday that a three-month monitoring deal between Iran and the United Nations nuclear watchdog had expired and that the country would block inspectors from accessing nuclear site images.

Both sides, the UN and Iran, then on Monday extended the agreement by a month. This move will avoid a collapse that could have pitched wider talks on reviving the 2015 Iran nuclear deal into crisis.

The US then added that there was no sign yet that Iran was willing to comply with nuclear commitments needed to lift sanctions when asked if a decision was made to lift sanctions on Iran.

European diplomats said that failure to agree to an extension of the monitoring deal would plunge wider indirect talks between the US and the Gulf state on reviving the 2015 Iran nuclear deal into crisis.

Former US President, Mr Donald Trump, withdrew the United States from the deal in 2018 and re-imposed sanctions.

Even with a potential restart of Iran exports, the case for higher oil prices on Monday was spurred by a vaccine-driven increase in global demand.

A top investment bank, Goldman Sachs, said in its new base case estimate that Brent prices would still reach $80 per barrel in the fourth quarter of 2021.

The market still continues to watch the COVID-19 situation in Southeast Asia as nations like Thailand, Malaysia, Vietnam and Singapore, which managed to control the coronavirus last year, are struggling to contain recent outbreaks as new variants and vaccine shortages leave populations exposed.