Oil was mixed on Monday morning in Asia, reversing some earlier losses. Expectations that global supply would remain tight continued as fuel demand increases and investors took little notice of the small steps forward in the U.S.-Iran nuclear talks.
Both Brent and WTI futures rose more than $2 on the previous Friday, recording a seventh consecutive week of gains as ongoing worries over supply disruptions continued to give the black liquid a boost.
The U.S. during the previous week restored sanctions waivers to Iran to allow international nuclear cooperation projects, as talks on the 2015 international nuclear deal enter their final phase. Should the sanctions on Iran be completely lifted, the country could boost oil shipments and add to global supply.
“Investors scooped up short-term profits on the news suggesting progress in the U.S.-Iran nuclear talks, but fresh buying kicked in again after the technical corrections as global supply is expected to stay tight,” Nomura Securities senior economist Tatsufumi Okoshi told Reuters.
Other investors agreed, expecting “more twists and turns in the U.S.-Iranian talks and no agreement to be reached anytime soon,” Fujitomi Securities Co. Ltd. chief analyst Kazuhiko Saito told Reuters.
“The market tone remained bullish, with investment bankers predicting Brent hitting $100 a barrel and global supply continuing to be tight with OPEC+ not reaching their output targets and the United States not raising output much,” Saito added.
The Organization of the Petroleum Exporting Countries (OPEC) and allies (OPEC+)’s struggle to meet targets continues, despite pressure ongoing to raise production more quickly. In the U.S., although the rig count has been on an upward trend for a record consecutive 18 months, oil production is still far from pre-COVID-19 record levels.
Tensions in Eastern Europe also remain, with U.S. White House national security adviser Jake Sullivan warning on Sunday that Russia could invade Ukraine within days or weeks but could still opt for a diplomatic path. Russia is the world’s second-largest oil exporter.