Another Week Of Oil Gains As Trump Claims Deal With Iran Is Within Reach

However, analysts warn again of a supply glut and potentially lower demand: File Image/Pixabay

Oil prices on Friday contributed to a second week of gains, but higher supply remained a significant concern for many analysts contemplating the possible success of Washington obtaining a nuclear deal from Iran and allowing that country to rejoin the international export market.

Brent settled up 88 cents at $65.41 per barrel, while West Texas Intermediate settled up 87 cents at $62.49; both benchmarks notched a weekly rise of 1 percent and 2.4 percent respectively.

Dennis Kissler, senior vice president of trading at BOK Financial, noted that Iran along with anticipated increases in output from the Organization of the Petroleum Exporting Countries (OPEC) has "resurfaced the bear trade," and he added that "Near term, with geopolitical temperatures cooling, a strong seasonal travel demand will be needed in the coming months to counter the expected rises in supplies."

As for the Iran talks, U.S. president Donald Trump said he was nearing a nuclear deal, and ING analysts speculated that such a success would result in the lifting of sanctions and additional supply of about 400,000 barrels per day (bpd).

Robert Rennie, head of commodity and carbon research at Westpac Banking Corp., pegged the amount as somewhat lower when he remarked that "We wouldn't overstate the impact on Iranian supply here — a deal might add 200,000 to 300,000 barrels a day to Iranian exports, which isn't enormous…….we maintain the view that Brent should remain in a $60 to $65 holding pattern in the weeks ahead."

In other oil news on Friday, ship tracking data from Kpler showed that one fallout of Trump's sanctions against trading partners is that China is now the top customer for oil shipped from Canada on that country's Trans Mountain pipeline.

While oil is currently exempt from U.S. tariffs, Canada has sought to diversify its exports, and it shipped about 207,000 bpd on average to China since the Trans Mountain expansion ramped up to full operations in June last year; this is compared to an average of about 7,000 bpd in the decade to 2023.

Also on Friday, a source with direct knowledge of the plans told media that cash-strapped Egypt is seeking to buy more fuel oil on which to run some of its power plants, as natural gas supply is too expensive; state-controlled Egyptian General Petroleum Corporation  is looking to buy via a tender nearly 2 million tons of oil, to be delivered in May and June.