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Oil prices up rise on potential hitch in Iran talks - CNBC

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Cranes at an oil industry support facility in Port Fourchon, Louisiana, U.S., on Wednesday, April 21, 2021.
Luke Sharrett | Bloomberg | Getty Images

Oil prices rose on Monday as a potential snag emerged in reviving the 2015 Iran nuclear deal that could add more oil supply, while Goldman Sachs said the case for higher prices remained intact even with increased Iran exports.

Brent crude oil futures for July advanced $1.71, or 2.57%, to $68.15 per barrel, while U.S. West Texas Intermediate for July was at $65.44 a barrel, up $1.86, or 2.9%.

Oil prices fell almost 3% last week after Iran's President Hassan Rouhani said the United States was ready to lift sanctions on his country's oil, banking and shipping sectors.

However, the speaker of Iran's parliament said on Sunday a three-month monitoring deal between Iran and the U.N. nuclear watchdog had expired and that its access to images from inside some Iranian nuclear sites would cease.

European diplomats said last week that failure to agree an extension of the monitoring deal would plunge wider, indirect talks between Washington and Tehran on reviving the 2015 Iran nuclear deal, due to resume in Vienna this week, into crisis.

Former President Donald Trump withdrew the United States from the deal in 2018 and re-imposed sanctions.

"All in all, it seems to be only a matter of time before the sides involved put pen to paper on a new nuclear accord," said Stephen Brennock of oil broker PVM.

"Investors are bracing for a fresh wave of what will surely be heavily discounted Iranian crude ... yet for all this alarmism, an aggressive ramp-up in Iranian production and exports is unlikely to stall the drawdown in global oil stocks."

Even with a potential restart of Iran exports, the case for higher oil prices remains intact due to a vaccine-driven increase in global demand, Goldman Sachs analysts said.

"Even aggressively assuming a restart in July, we estimate that Brent prices would still reach $80 per barrel in fourth quarter 2021," the bank said in a note.

Its new base case for an October restart still supports an $80 per barrel forecast for this summer, it added.

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Oil prices up rise on potential hitch in Iran talks - CNBC
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