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Oil Steady Near One Weak High as Possibility of Return of Iran Supply Boost Demand

Oil prices were steady on Tuesday, holding around one-week highs after jumping more than 3% the previous session as prospects of an early return of oil exporter Iran to international crude markets lessoned.

Brent crude futures were down 6 cents at $68.40 a barrel by 0039 GMT, having jumped 3% on Monday.

U.S. West Texas Intermediate futures fell 8 cents to $65.97 a barrel after gaining 3.9% the previous session.

oil chart
U. S WTI OIL PERFORMANCE CHART

Indirect negotiations between the United States and Iran are due to resume in Vienna this week. Talks were given another life after Tehran, and the U.N. nuclear agency extended a monitoring agreement on the Middle Eastern country’s atomic program.

The Iranian President Hassan Rouhani spoke by phone with his Chinese counterpart, Xi Jinping, on Monday, with the pair agreeing to deepen ties in trade and energy.

Worries that Iran was soon going to start selling oil if an agreement resulted in the lifting of U.N. and other sanctions on crude exports had pulled down prices earlier, but talks have not been conclusive.

“U.S. Secretary of State Blinken poured cold water over the prospect of a revival, stating that there was no indication that Iran is willing to comply with nuclear commitments,” Sophie Griffiths, Market Analyst, OANDA

Effect of COVID-19 on Oil Demand

However, the COVID-19 situation all over the world is still threatening the oil demand outlook.

Mobility in the U.S. is picking up, aiding energy consumption. With more than 61% of U.S. adults having received at least one vaccine dose, new coronavirus cases rose just 0.5% in the past week, the slowest increase since March 2020. The upcoming Memorial Daybreak, a three-day weekend for many, marks the start of the nation’s summer driving season.

Parts of Europe and the United States are recording fewer infections and deaths, prompting governments to ease restrictions. However, in other areas such as India – the world’s third-biggest oil importer – rates are still high.

In India, new coronavirus infections rose by 222,315, government data showed on Monday, the world’s biggest 24-hour increase, though numbers have fallen off highs of over 400,000 earlier this month.