Crude closed lower on Monday as coronavirus cases continued to mount, and renewed lockdown measures were enacted in the US, Europe, and Asia. Vaccine hopes and OPEC+ supply cut extensions could not outweigh the pessimism caused by the rapidly spreading infection and the growing number of deaths caused by the virus. Crude is continuing its losses in early trading this morning.
According to Iran state media, Iran is planning to produce crude at full capacity within three months. The production increase is ahead of a possible easing of US sanctions after Joe Biden takes office. In 2018, President Trump exited the 2015 nuclear deal and reimposed sanctions on Iran. The sanctions included limiting oil exports from Iran, which had been nearly two million barrels per day. President-elect Biden has said that he would rejoin the nuclear deal and lift sanctions if Iran returned to strict compliance with the pact.
Should Iran get its way, millions of barrels per day will be added to an already over-supplied international market. Even if demand returns to pre-covid levels, OPEC+ may need to take action to balance the market or risk growing inventories and plummeting prices.
In early trading today, crude prices are down. Crude is currently trading at $45.66, a loss of 10 cents.
Fuel prices are up this morning. Diesel is trading at $1.4045, a gain of 0.5 cents. Gasoline is trading at $1.2664, a gain of 1.1 cents.