By Adedapo Adesanya
Crude oil prices settled slightly lower on Tuesday as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) discussed raising oil production.
Earlier in the day, the price of the Brent crude hit a two-year high of $75 per barrel but it later dropped to $74.85 per barrel, losing 23 cents or 0.18 per cent while the West Texas Intermediate (WTI) declined by 0.29 per cent or 58 cents to trade at $73.08 per barrel.
OPEC+ is discussing a gradual increase in oil output from August, but no decision has been taken on the exact volumes, an OPEC+ source reportedly said on Tuesday, according to Reuters.
The alliance is already returning 2.1 million barrels per day (bpd) to the market from May through July as part of a plan to unwind last year’s record output curbs gradually as pandemic-hit demand recovers.
The group will have its next meeting on July 1.
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 rebound has pushed up spot premiums for crude in Asia and Europe to multi-month highs.
On Monday, the market reacted positively over a pause in negotiations to revive the Iran nuclear deal after Mr Ebrahim Raisi won the country’s presidential election.
Although he backed talks between Iran and six world powers to revive a 2015 nuclear deal but flatly rejected meeting US President, Mr Joe Biden, even if the country removed all sanctions placed by the Donald Trump administration.
Removal of sanctions on commodities, including crude, could see an extra one million barrel flow into the market as it would be exempted from supply quotas.
Meanwhile, forecasters continue to see a higher oil price amid tighter oil supply and recovering demand which could push oil briefly to $100 per barrel in 2022.
US crude stocks were expected to have dropped for a fifth consecutive week, and this could lift prices.
The Energy Information Administration (EIA) said last week that US crude oil stockpiles dropped sharply in the week to June 11 as refineries boosted operations to their highest since January 2020, signalling a continued improvement in demand.
Dipo Olowookere