Oil Up 1% On Assertion That Iran Won't Re-enter Global Crude Market Anytime Soon

Meanwhile, demand recovery continues throughout the U.S., Europe, and Asia: File Image/Pixabay

Crude traders on Tuesday took the long-standing contention of political analysts to heart: that true peace between the U.S. and Iran and a corresponding return of Iranian oil would not happen any time soon - and as a result, oil prices rose again, this time by 1 percent.

Antony Blinken, U.S. Secretary of State, remarked that "I would anticipate that even in the event of a return to compliance with the JCPOA [2015 Joint Comprehensive Plan of Action], hundreds of sanctions will remain in place, including sanctions imposed by the Trump administration."

Soon after, Brent rose 73 cents, or 1 percent, to close at $72.22 per barrel, the highest it has settled since May 2019; West Texas Intermediate rose 82 cents, or 1.2 percent, to settle at $70.05 per barrel, the highest since October 2018.

Futures were still pressured by data showing China's crude imports were down 14.6 percent in May from a year earlier; but by contrast, traders were emboldened by two market sources claiming that U.S. crude inventories fell by 2.1 million barrels last week - yet another sign of demand recovery that is sweeping the globe as Covid vaccinations obliterate the pandemic.

Another positive sign reported on Tuesday: U.S. crude oil exports reached 3.24 million barrels per day (bpd) in April compared with 2.61 million bpd the March, according to foreign trade data from the U.S. Census Bureau.

Additionally, more cars have returned to the roads in countries such as China and Japan, according to Apple Inc.; traffic in 15 European cities was as busy as in 2019, while the physical market for Middle East crude started the month strongly, backed by expectations for robust Asia demand.

Commerzbank said, "The fundamental environment on the oil market remains favourable: fuel demand is recovering strongly not only in the United States, but also in Europe following the lifting of restrictions."

Meanwhile, it is expected that American shale oil production will rise only moderately through 2022, even though crude price increases have triggered a pickup in drilling, according to BloombergNEF.