• A new Iran deal is less likely than it was last week.
• UN nuclear watchdog is extending a recently expired monitoring agreement by a month.

The price of oil as measured by West Texas Intermediate spot is higher by over 3.26% at the time of writing, up from a low of $63.65 and reaching a high of $66.11.  

The price has rallied and has been fueled by COVID-19 vaccinations and the prospects of a demand drive like no other that can easily absorb any Iranian oil that would come on the market if Western talks with Tehran lead to the lifting of sanctions.

President Rouhani was announced last week that major sanctions will be lifted which would be expected to create fears of the additional supply that would ultimately be weighing on spot prices in energy markets.

However, there are now expectations that a new deal is less likely than it was last week as there are signs that  Iranians and western powers cannot get the details worked out.

Iran and the UN nuclear watchdog are extending a recently expired monitoring agreement by a month, both sides said on Monday, avoiding a collapse of talks on reviving the 2015 Iran nuclear.

In any case, analysts at TD Securities explained that ”time spreads have remained well-behaved, in line with our expectations that the global market will ultimately be able to absorb the additional barrels.”

”After all, a massive amount of pent-up demand for mobility should offset the supply increases this summer, suggesting that a gradual return to market could even lead to a short window of time in which crude prices could break north of $70/bbl if demand surprises to the upside, while OPEC+ sticks to their cautious agreement,” the analysts added.

”Ultimately, however, the massive scale of OPEC’s spare capacity will make a break north of $70/bbl not sustainable.”