Oil rallies on weaker dollar and Iran supply uncertainty

Reuters

Published Jun 20, 2021 09:59PM ET

Updated Jun 21, 2021 05:03PM ET

By Jessica Resnick-Ault

NEW YORK (Reuters) -Oil prices soared on Monday, gaining on a pause in talks to end U.S. sanctions on Iranian crude, and as the dollar retreated from two-month highs.

Brent crude for August gained $1.39, or 1.9% to settle at $74.90 a barrel. U.S. West Texas Intermediate (WTI) crude for July gained $2.02, or 2.8%, to end at $73.66.

Both benchmarks have risen for the past four weeks on optimism over the pace of global COVID-19 vaccinations and expected pick-up in summer travel. The rebound has pushed up spot premiums for crude in Asia and Europe to multi-month highs.

Bank of America (NYSE:BAC) said that Brent crude was likely to average $68 a barrel this year but could hit $100 next year on unleashed pent-up demand and more private car usage.

Oil was boosted by a weaker U.S. dollar, which can send speculative investors into greenback-denominated assets like commodities. [USD/]

Negotiations to revive the Iran nuclear deal took a pause on Sunday after hardline judge Ebrahim Raisi won the country's presidential election.

"The election of a hardliner in Iran is weighing on market (supply) as sanctions look less likely to be lifted," said Bob Yawger, director of Energy Futures at Mizuho in New York.

A deal could lead to Iran exporting an extra 1 million barrels per day, or 1% of global supply, for more than six months from its storage facilities.

Iranian and Western officials say Raisi's rise is unlikely to alter Iran's negotiating position. Two diplomats said they expected a break of about 10 days.