Oil pulls back from two-year peak on prospect of rising Iranian exports

London — Oil eased after hitting a two-year peak on Monday, pressured by the prospect of higher Iranian exports though recovering demand and Opec+ supply curbs provided underlying support.

Demand is rebounding in the US and Europe as Covid-19 restrictions are loosened. In another hopeful step for demand, India is easing its lockdown and Opec and its allies are sticking to agreed supply restraints through July.

Brent crude fell 35c or 0.5%, to $71.54 a barrel by 10.10am, after earlier hitting $72.27, the highest since May 2019. US West Texas Intermediate touched $70 for the first time since October 2018 but reversed course to trade at $69.22, down 40c or 0.6%.

“With some improvement in the pandemic situation in India and the recovery in the US, China and Europe remaining on track, oil should remain a buy on dips,” said Jeffrey Halley, analyst at brokerage Oanda.

Crude has risen for the past two weeks, and Brent is up by over 37% this year, helped by supply curbs by Opec and allies and demand recovering partly from the pandemic-induced collapse.

Investors may have sold off some contracts when WTI hit $70, said Avtar Sandu, a senior commodities manager at Phillips Futures in Singapore. Figures showing a drop in China’s crude imports also weighed on sentiment.

“The primary concern is about Iranian barrels coming back into the market but I don’t think there will be a deal before the Iranian presidential election,” he said. The election is on June 18.

Iran and global powers will enter a fifth round of talks on June 10 in Vienna that could include Washington lifting economic sanctions on Iranian oil exports.

Reuters