By Adedapo Adesanya
Oil prices edged higher on Tuesday after the United States said if it reaches a nuclear deal with Iran, many of its sanctions would not be lifted, calming fears of additional supply to the market.
Brent crude futures closed 23 cents or 0.32 per cent up at $72.45 per barrel while the US West Texas Intermediate (WTI) crude futures gained 25 cents or 0.36 per cent to trade at $70.30 per barrel.
The positive outcome came on the back of US Secretary of State, Mr Antony Blinken, disclosing that even if talks were successful to revive a 2015 nuclear deal, the country would not remove sanctions placed on the Middle East county.
He said, “I would anticipate that even in the event of a return to compliance with the JCPOA (Joint Comprehensive Plan of Action), hundreds of sanctions will remain in place, including sanctions imposed by the Trump administration.”
*If they are not inconsistent with the JCPOA, they will remain unless and until Iran’s behaviour changes,” he added.
The discussions in Vienna, brokered by European diplomats, have been locked in dispute on which sanctions to lift.
This boosted confidence and also eased pressure that an additional one or two million barrels could be injected into the market.
Crude prices have risen in recent weeks, with Brent up by nearly 40 per cent this year and WTI gaining even more, amid expectations of demand returning as some countries succeed in vaccinating populations against COVID-19.
However, even as overall global demand keeps improving, the COVID-19 comeback in Asia and parts of South America continue to create a bumpy recovery for the market in general.
While consumption improves, the Organization of Petroleum Exporting Countries and its allies (OPEC+) are returning some stalled supply to the market.
The group had been looking at prospects for demand growth later this year and the potential lifting of US sanctions on Iranian oil before deciding on output policy beyond July.
Adding to the bullish sentiment, the American Petroleum Institute (API) on Tuesday reported a draw in crude oil inventories of 2.108-million barrels for the week ending June 4.
Analysts had predicted a draw of 2.036 million barrels for the week.
In the previous week, the API reported a draw in oil inventories of 5.36 million barrels after analysts had predicted a draw half that size of 2.114 million barrels.
Crude oil inventories have fallen by more than 14 million barrels since the start of 2021, according to API data, but are still up 43 million barrels since January 2020.
Data from the Energy Information Administration (EIA) will be released later on Wednesday to confirm the projection made by the API.
Dipo Olowookere