By Adedapo Adesanya
Oil prices continued their bullish stand on Thursday, holding close to their highest in almost three years as the market continues to get support from the draws in crude inventories in the largest producing nation in the world, the United States.
The Brent crude added 6 cents or 0.07 per cent to trade at $75.61 per barrel yesterday while the United States West Texas Intermediate (WTI) made a 0.07 per cent or 5 cents gain to trade at $73.35 per barrel. This means that both benchmarks had hit their highest since October 2018.
The higher prices are welcomed news for the oil markets and can largely be attributed to falling US inventories, which means that there is a better oil demand outlook.
Prices also drew support from doubts about the future of the 2015 Iran nuclear deal that could end US sanctions on Iranian crude exports.
The US Government State countered a statement made by a senior Iranian official that the country had agreed to lift all sanctions on Iran’s oil and shipping industry.
It was reported that the issues were still under negotiation and nothing had been agreed upon despite claims by Iran that an agreement has been reached to remove all insurance, oil and shipping sanctions that were imposed by former US President Donald Trump.
The end of sanctions and a return of Iranian barrels could return one million barrels to the global oil market.
Data from Europe’s largest economy, Germany, also helped prices with the largest jump in retail conditions recorded since its reunification more than three decades ago. This lent support to expectations that European fuel demand will recover.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) has been discussing a further unwinding of last year’s record output cuts from August but no decision has been made yet ahead of their next meeting on July 1.
However, the Indian Oil Minister, Mr Dharmendra Pradhan, called on the cartel to phase out crude output cuts as high prices are fuelling inflation.
In a series of tweets after a virtual meeting with OPEC Secretary-General, Mr Mohammad Sanusi Barkindo, he said oil prices should remain within a reasonable band to encourage a consumption-led recovery from the coronavirus pandemic.
India is the world’s third-biggest oil importer and consumer; it relies on overseas supplies for over 80 per cent of its oil needs.
This is similar to issues raised by Mr Mele Kyari, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), who warned that rather than being a positive development, the rising prices of crude oil in the international market could cause major challenges for resource-dependent nations like Nigeria.
Modupe Gbadeyanka