Oil prices climbed to highs last seen in October 2018 on Monday as the United States and Iran wrangled over the revival of a nuclear deal, delaying a surge in Iranian oil exports, while investors eyed the outcome of the OPEC+ meeting this week.
Brent crude for August had gained 22 cents, or 0.3 percent, to USD 76.40 a barrel by 0051 GMT while US West Texas Intermediate crude for August was at USD 74.30 a barrel, up 25 cents, or 0.3 percent.
Oil prices rose for a fifth week last week as fuel demand rebounded on strong economic growth and increased travel during summer in the northern hemisphere, while global crude supplies stayed snug as the Organization of the Petroleum Exporting Countries (OPEC) and their allies maintained production cuts.
The producer group, known as OPEC+, is returning 2.1 million barrels per day (bpd) to the market from May through July as part of a plan to gradually unwind last year’s record oil output curbs. OPEC+ meets on July 1 and could further ease supply cuts in August as oil prices rise on demand recovery.
“We expect the OPEC+ alliance will try to balance the market’s need for more supply against the fragile nature of the recovery in demand, at next week’s meeting,” ANZ analysts said, adding that jet fuel demand recovery continued to be capped with the closure of international borders.
ANZ expect OPEC+ to increase output by about 500,000 bpd in August, which is likely to support higher prices.
Negotiations over the revival of Iran’s nuclear deal are expected to resume in the coming days. A monitoring agreement between Tehran and the UN nuclear watchdog lapsed last week.
A weaker US dollar and a reversal of risk appetite in global markets also supported dollar-denominated commodity prices.