Oil at $ 73, but on the march to high peaks

Iranian negotiators in Vienna confirm that they intend to continue pushing for an agreement after the weekend of the Iranian presidential elections, which saw the head of the ultra-conservative judiciary Ebrahim Raisi emerge victorious: "we have reached a clear text on all issues and what remains it requires the decision of all parties. It is not unlikely that the next round of talks will be the last, ”the Foreign Ministry said optimistically. But that has been the constant refrain for weeks, still with no definitive end in sight.

But in a more pessimistic tone, the West warns that there is nothing 'open' about the talks: "Western officials warned Tehran on Sunday that negotiations to revive its nuclear deal could not continue indefinitely, after the parties they announced a break following the election of a new president in Iran, ”according to Reuters. In the last month, forecasts have intensified about what the impact of a "done deal" – if things finally come to Vienna – on global oil prices, which would immediately see at least 2.5 million barrels of Iranian crude oil, will be. day they come back to flood the market. For a month we have been singing about the agreement reached, it is a pity that the agreement does not exist yet …

On Sunday negotiators updated a sixth round of meetings but still with no deal struck, Bloomberg noted, “Oil held close to $ 72 a barrel as inconclusive nuclear talks between world powers and Iran – which elected a new hard-line president – the prospects for a rapid resumption of crude oil exports from the Islamic Republic have dulled ”. It is still rising until Monday morning, with Brent Crude hovering just under $ 73.5 a barrel.

Let's ask ourselves a question: would the approval of the agreement with Iran really have the power to lower the price of crude oil on international markets?

We take into account four factors:

1. the fact that Iran would take some time to increase production anyway;
2. the fact that, however, until now, Tehran has sold its crude, under the counter, to China anyway;
3. the fact that after the lockdown, consumption is recovering;
4. the fact that large Western companies are cutting investment in fossil fuels, thus limiting the development of production, all for the current "Green Activism".

Consequently, combined factors will push oil demand up, probably towards $ 100 a barrel, and even in a fairly short timeframe, except that OPEC + does not consistently increase supply or that the price does not prove too early a test. for still weak growth.

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The article Oil at 73 dollars, but on the march towards high peaks comes from ScenariEconomici.it .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/petrolio-a-73-dollari-ma-in-marcia-verso-alti-picchi/ on Mon, 21 Jun 2021 17:15:26 +0000.