This morning crude opened up $71.51 while reaching an early morning high of $72.41. Prices this morning remained mostly flat as summer driving demand continues to pick up. Iran, which last week held its presidential election, is also at the top of traders’ minds; the country elected conservative candidate Ebrahim Raisi on Friday.
Over the weekend, reports of positive steps toward restoring the Iran nuclear deal made headlines. A US-Iran agreement would increase global oil supplies by nearly 2 million barrels per day, alleviating tight supply concerns. Analysts suggest Iran could unleash its full oil productivity in short order, meaning the price impact would be rapid. Raisi’s election presents some challenges for negotiations – principally that he was individually sanctioned by the US government for supporting the Iranian Supreme Leader Ali Khamenei. Diplomats have a little over a month until Raisi is sworn in, which would reset talks and add further delays to negotiations.
To prepare for sanctions being lifted, Iran has already begun storing vast crude quantities in oil tankers around the Persian Gulf. As soon as sanctions are lifted, they would be able to unleash this product on global markets. This adds to oversupply concerns – not only will daily production grow, but Iran can also draw down its oil reserves. Iran negotiations are central to oil price forecasts for 2021 – a deal would cause prices to fall quicky, while delays could see oil prices continue rising.
Over the weekend, Tropical Storm Claudette claimed the lives of 13 people in Alabama as a result of high wind speeds, flooding, and extreme rain. The storm has finally begun weakening, but meteorologists suggest this is only temporary. With the storm weakening, it has been downgraded now to a tropical depression. Areas along the Carolina coast are expected to feel the storm’s might as it strengthens to tropical storm status tonight. The National Hurricane Center (NHC) has urged people in areas of Georgia, Florida, North Carolina, and South Carolina to prepare for the worst as Claudette draws near.