By Adedapo Adesanya
Brent crude soared closer to $75 per barrel on Monday, June 21 on the back of uncertainty concerning the renewed talks on lifting US sanctions on Iranian crude as the new President-elect of Iran, Mr Ebrahim Raisi.
It was observed that yesterday, the price of the global crude benchmark traded at $74.93 per barrel after gaining $1.42 cents or 1.93 per cent, while the United States West Texas Intermediate (WTI) gained 2.61 per cent or $1.87 to trade at $73.66 per barrel.
Both benchmarks have risen for the past four weeks on optimism over the pace of global COVID-19 vaccinations and expected pick-up in summer travel.
The prices further grew as Mr Raisa, who is referred to as a hardliner, noted that he would seek to improve ties with regional neighbours and revive the 2015 nuclear deal but at the same time ruled out meeting with US President Joe Biden.
The 2015 Joint Comprehensive Plan of Action (JCPOA) brokered by former American President, Mr Barack Obama, lifted sanctions on Iran products that had crippled its economy and cut its oil exports roughly in half in exchange for curbs to its nuclear program.
In exchange for billions of dollars in sanctions relief, Iran agreed to dismantle some of its nuclear programmes and open its facilities to more extensive international inspections.
Apart from the United States, France, Germany, the U.K., Russia and China were also signatories of the agreement.
In 2018, then-President Donald Trump kept a campaign promise and unilaterally withdrew the United States from the JCPOA and reintroduced sanctions on the Middle East country that had been previously lifted.
Iran has since ramped up its nuclear activity far beyond the deal’s limits in what it says is a protest against the sanctions.
Now, if they reach a deal, Iran could start exporting an extra 1 million barrels per day, or 1 per cent of global supply, for more than six months from its storage facilities.
Also helping the black gold was a weaker US Dollar, which can send speculative investors into greenback-denominated assets like crude.
Investors also looked at a report from the Bank of America which forecast that oil may surge to $100 a barrel next year as travel demand rebounds.
The bank explained that global oil consumption will continue to outstrip supply in 2022 as the economic recovery from the pandemic boosts fuel consumption, while investment in new production is pressured by environmental concerns.
If crude does return to triple digits, it will be the first time since 2014, before a flood of North American shale oil sent the market into a slump from which it has never fully recovered.
Oil prices have also drawn support from forecasts of limited growth in US oil output.
