The price of oil may well be at 80$ as well

The oil market continues to climb to new highs as the prospect of a quick lifting of sanctions on Iran melts away. Although a deal has been agreed, there are still outstanding issues - political, technical, legal and practical - so Tehran's quick return to the oil market is delayed. In view of this, has updated record highs since April 2019.

How long will oil price growth continue and what can prevent it? Andrei Vernikov, Head of the Investment Analysis and Training Department at UNIVER Capital, answered the question posed by Fortrader magazine.

- Iranian Foreign Ministry spokesman Saeed Khatibzadeh said that the interested parties have agreed to cancel all sectoral sanctions, including oil sanctions. This is not news for the oil market, so we should not expect a collapse in quotations. The big question remains how quickly Iran will be able to return to full-fledged export supplies. The question also remains "who will win the June 18 Iranian presidential election?" If the opponent of the West wins, the negotiations will be frozen.

Iran could export more than 2 million barrels of oil per day if sanctions are lifted, Iranian President Hassan Rouhani said six months ago. And there is mistrust of this figure. According to some reports, Iran sells 0.7 million barrels to China and some other countries through gray schemes. Worn-out infrastructure prevents it from increasing oil production. And it will take at least 6 months to reach the export volume of 2 million barrels of oil. At the moment, there is a great demand for oil in the world, while US shale oil producers are very slowly increasing production. So oil from Iran will help balance the oil market. There will be no catastrophe from the increase in exports from Iran now, but in the future there will be supply and demand mechanisms and restrictions on production.

Brent crude oil price rises

How long prices will rise depends on many factors, including the success of mass vaccination against COVID-19. If the new strains cause a rise in the incidence of the disease in countries that are oil consumers, oil prices will begin to adjust. The world's major oil consumers are the US, China and India. In India the situation with morbidity is tense, in the other two countries the situation is normalizing. At the same time, it should be noted the high tourist and automobile season in the USA, which contributes to increased consumption of gasoline and aviation kerosene.

At the moment, many commodity prices, such as steel, copper, timber have risen strongly, while oil prices have lagged behind. Therefore, I do not expect a collapse. A correction to the region of 69, of course, may be possible, and oil analysts' forecasts of 80 dollars per barrel in the middle of the year (Brent) may well come true. Resistance at the moment is 75, but tomorrow it will be a bit higher.