Oil extended gains to hit fresh multi-year highs on Monday, supported by a brighter economic and fuel-demand outlook. At the same time, investors eyed the outcome of talks between Iran and world powers over a nuclear deal set to boost crude supplies.
Brent crude futures for August rose 28 cents, or 0.4%, to $72.17 a barrel by 0107 GMT, their highest since May 2019.
U.S. West Texas Intermediate crude for July touched $70 for the first time since October 2018 and was at $69.91 a barrel, up 29 cents, or 0.4%.
Both contracts have risen for the past two weeks as fuel demand is rebounding in the United States and Europe after governments loosened COVID-19 restrictions ahead of summer travel.
Global oil demand is expected to exceed supplies in the second half despite a gradual easing of supply cuts by OPEC+ producers, analysts say.
“Oil is in strong demand right now, with economies around the world opening up, Optimism around rising fuel consumption is growing as the US, China and Europe rebound strongly from the pandemic.” Mr Daniel Yergin, the oil historian and vice-chairman at IHS Markit.
Talks on Iranian Oil supply
A slowdown in talks between Iran and global powers in reviving a 2015 nuclear deal and a drop in U.S. rig count also supported fuel prices.
Iran and global powers will enter the fifth round of talks on June 10 in Vienna, including Washington lifting economic sanctions on Iranian oil exports.
While the European Union envoy coordinating the negotiations had said he believed a deal would be struck at this week’s talks, other senior diplomats have said the most difficult decisions still lie ahead.
Analysts expect Iran to increase its production by 500,000 to 1 million barrels per day once sanctions are lifted.