President-elect Ebrahim Raisi, who is subject to sanctions himself, has demanded an end to the penalties on his country and a return to the 2015 nuclear accord. The election of the conservative cleric will likely delay such a move, according to consultants SVB Energy International LLC.
The failure to clinch an agreement puts additional pressure on other members of the OPEC+ coalition, which meets next week to consider restoring more oil output.
Crude is up almost 50% this year as major economies emerge from restrictions and lockdowns after the rollout of Covid-19 vaccinations worldwide. Demand has rebounded, especially in the U.S., Europe and parts of Asia. Consumption in China has exceeded pre-pandemic levels and India is showing signs of recovering from a deadly second virus wave that decimated its economy.
“Oil fundamentals are still tightening, with oil demand recovering further as people in the U.S. and Europe enjoy the removal of restrictions on mobility,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “Meanwhile, OPEC+ production is rising only modestly, and refiners who had hoped for an Iranian deal now need to secure barrels elsewhere.”
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Key price indicators suggest the market is getting tighter. The prompt timespread for Brent was 81 cents a barrel in backwardation — where near-dated prices are more expensive than later-dated ones. That compares with 57 cents a week earlier.
The tighter backdrop is sparking more bullish price calls. Futures may hit $100 a barrel next year as pent-up demand for travel is unleashed, while investment in new supplies is crimped by environmental pressures, according to Bank of America Corp.
See also: Citi Says Brent Oil Will Probably Touch $85/Bbl Before 4Q 2021
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Canada’s Advantage as the World’s Demand for Plastic Continues to Grow