By Adedapo Adesanya
The price of the international crude benchmark, Brent crude, climbed to $73.17 per barrel on Monday, June 14 after it appreciated by 46 cents or 0.63 per cent. This is the highest level it has reached since October 2018.
One of the major drivers of this is the demand recovery boosted by the rollout of coronavirus vaccines in Europe and the United States.
Also, the waning fears over the return of Iranian crude supply to the market supported the growth posted by the commodity yesterday as the West Texas Intermediate (WTI) crude also improved by 32 cents or 0.45 per cent to trade at $71.23 per barrel.
Oil has surged in recent weeks as road traffic in the US and Europe increase with more people vaccinated against COVID-19.
In addition, American daily air travellers topped 2 million for the first time since the pandemic began. That’s boosting oil demand, which may already be high enough to absorb any additional supply into the market.
However, Britain late Monday delayed plans to lift most remaining COVID-19 restrictions by a month because of the rapid spread of the more infectious Delta variant.
There are new doubts that another one million barrel will enter the market after Iran’s Deputy Foreign Minister, Mr Abbas Araghchi cast doubt over the weekend on the chances of reviving the nuclear deal before the elections on June 18.
Oil prices had held momentum when the International Energy Agency (IEA) said on Friday that it expected global demand to return to pre-pandemic levels at the end of 2022, more quickly than previously anticipated.
The IEA urged the Organization of the Petroleum Exporting Countries and allies (OPEC+) to increase output to meet demand.
OPEC+ has been restraining production to support prices after the pandemic wiped out demand in 2020, maintaining strong compliance with agreed targets in May.
At the same time, the IEA has also reiterated that market realities are at odds with its proposed strategies to reach net zero-emission levels by 2050.
Prices also received support as heavy maintenance seasons in Canada and the North Sea is set to take 330,000 barrels per day of oil and condensate supply offline at Canada oil sands projects, along with another 370,000 barrels per day offline in the North Sea.
