(Bloomberg) -- Oil climbed near $72 a barrel after the latest talks between world powers and Iran to revive a nuclear deal ended without an agreement, a day after the OPEC producer elected a new president.
Futures in New York rose 0.4% after increasing for a fourth week. Diplomats adjourned a sixth round of meetings with significant gaps remaining to mend the accord, the third time since talks began in April that negotiators have missed self-imposed deadlines to rejuvenate the agreement. A revived deal would likely lead to the easing of U.S. sanctions and higher crude flows.
The election of conservative cleric Ebrahim Raisi as Iran’s president, however, may complicate future talks. Raisi is subject to U.S. sanctions and Tehran insists they must be removed as part of an agreement to revive the pact.
Crude is up almost 50% this year as major economies emerge from restrictions and lockdowns after the roll-out of Covid-19 vaccinations worldwide. Demand has rebounded, especially in the U.S. and parts of Asia. Oil consumption in China has exceeded pre-pandemic levels and India is showing signs of recovering from a deadly second virus wave that decimated its economy.
“The market is quickly coming around to the view that, with demand rebounding so strongly over the northern hemisphere summer, additional supply will be required,” said Daniel Hynes, senior commodities strategist at Australia and New Zealand Banking Group Ltd. “With OPEC remaining cautious and little chance of Iranian oil hitting the market soon, the market looks likely to remain fairly tight in the next few months.”
The market has firmed in a bullish structure. The prompt timespread for Brent was 79 cents a barrel in backwardation -- where near-dated prices are more expensive than later-dated ones. That compares with 57 cents a week earlier.
Abbas Araghchi, Iran’s lead negotiator in the nuclear talks, said one of the most serious matters discussed in the latest round was Tehran’s need for a guarantee from the U.S. that future governments won’t exit the deal again -- as former President Donald Trump did in 2018 -- or reimpose sanctions.