Oil fell from a 2-year high, expecting higher Iranian exports

On Monday, oil prices declined after reaching a two-year high above $72 a barrel, pressured by the prospect of higher Iranian exports along with recovering demand and OPEC+ supply curbs, which provided underlying support.

Demand is soaring in the United States and Europe as coronavirus restrictions are loosened. Additionally, another hopeful step for fuel use is that India is easing its lockdown.

OPEC and its allies, the group known as OPEC+, are sticking to agreed supply restraints through July.

Brent crude declined by 62 cents, which equals 0.9%. It traded at $71.27, after earlier reaching $72.27, the highest since May 2019. U.S. West Texas Intermediate hit $70 for the first time since October 2018. However, it reversed course, fell by 0.8% or 55 cents, and settled at $69.07.

According to Jeffrey Halley, an analyst at brokerage OANDA, as the pandemic situation improves in India and the recovery in the U.S., China, and Europe remaining on track, oil should remain a buy on dips.

Brent crude oil is up by more than 37% this year

Crude has increased for the past two weeks, and Brent is up by more than 37% this year. Notably, they’re helped by supply curbs by the Organization of the Petroleum Exporting Countries and allies (OPEC+) and demand recovering in part from the pandemic-induced collapse.

Avtar Sandu, a senior commodities manager at Phillips Futures in Singapore, said that investors may have sold off some contracts when West Texas Intermediate hit $70. The prospect of more Iranian supply, and a decline in China’s crude imports, also weighed.

He also added that the primary concern is about Iranian barrels coming back into the market. However, Sandu announced he doesn’t think there will be a deal before the Iranian presidential election. Remarkably, the election is on June 18.

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