Oil Rises With Swift Iran Supply Return Looking Less Likely

(Bloomberg) -- Oil hit a 32-month high as the rollout of coronavirus vaccines boosted demand expectations for Europe and the U.S., and confidence faded over a quick return of Iranian crude supply.

Futures rose 1% in New York, building on a run of three weekly gains. Iran’s foreign ministry said there was “very little time left” for world powers to resolve outstanding differences to revive a 2015 nuclear deal, even though a broad agreement had been reached to enable the removal of sanctions on the country’s energy sector. Iran holds presidential elections this week.

There were expectations a deal to lift Iranian oil sanctions would be in place before the vote, said Giovanni Staunovo, a commodity analyst at UBS Group AG. “That seems not to be the case anymore.”

Oil has surged in recent weeks as road traffic in the U.S. and Europe increases with more people vaccinated against Covid-19. American daily air travelers topped 2 million for the first time since the pandemic began and speculators are the most bullish on the U.S. crude benchmark in about three years.

“Prices are rising in the belief that Iranian barrels will not flush the market anytime soon,” said Ole Hansen, head of commodities research at Saxo Bank A/S.

Iran’s Deputy Foreign Minister Abbas Araghchi cast doubt over the weekend on the chances of reviving the nuclear deal before the elections on June 18. Ebrahim Raisi, the hardline cleric widely tipped to replace President Hassan Rouhani, said that he’ll continue the negotiations if elected, but he won’t treat them as a major national concern.

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