Crude Oil price Today – IEA Report Sends price Skyward Ahead of US-Iran Talks
Crude Oil Fundamental Forecast – Bullish
- Crude oil prices rise above $71.00 for the first time since October 2018
- International Energy Agency (IEA) report shows bullish demand outlook
- Iran deal adding supply to market could pressure prices, talks resume Saturday
Rising confidence in the global economic recovery is helping to push oil prices higher, in line with other energy products. US crude oil prices broke into a fresh multi-year high on Friday, rising above the $71.00 level, which hasn’t been hit since October 2018. Prices have now seen the third consecutive weekly rise as demand in the global economy continues to heat up.
Oil prices received another tailwind Friday when the Paris-based International Energy Agency (IEA) released a positive report for oil market prices. The IEA report forecasted global oil demand to hit pre-pandemic levels in the second half of next year. Figures released by the IEA cited demand increasing by 5.4 thousand barrels per day (mb/d), followed by an additional 3.1 mb/d in 2022. The report also touches on the supply dynamic, stating:
“World oil supply is expected to grow at a faster rate in 2022, with the US driving gains of 1.6 mb/d from producers outside the OPEC+ alliance. That leaves room for OPEC+ to boost crude oil production by 1.4 mb/d above its July 2021-March 2022 target to meet demand growth. In 2021, oil output from non-OPEC+ is set to rise 710 kb/d, while total oil supply from OPEC+ could increase by 800 kb/d if the bloc sticks with its existing policy.”
Moreover, the Paris-based group confirmed that OPEC+ will need to further tap into its spare capacity to meet demand needs across the globe. That said, markets may soon see Iranian oil come back into the market, with talks between the United States and Iran set to resume this weekend in Vienna. The two countries have been negotiating a way to resume the nuclear deal that the US exited back in 2015.
Iran could supply nearly 1 million barrels per day by year’s end. Still, the political situation is fraught, and a deal is all but guaranteed. If successful, however, it could see prices cool off temporarily while markets price in the added supply. Iran is also increasing its output, according to OPEC’s June Monthly Oil Market Report. This may suggest Iran believes they are making progress in reaching a deal, one that would see the export sanctions lifted.
Crude Oil TRADING RESOURCES
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwateron Twitter
Crude Oil price Today - IEA Report Sends price Skyward Ahead of US-Iran Talks