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London — Oil prices rose on Wednesday, supported by an Opec+ decision to stick to its plan to restore supply to the market gradually, and by the slow pace of nuclear talks between Iran and the US.

Brent rose 48c, or 0.7%, to $70.73 a barrel at 10.56am, while US West Texas Intermediate was (WTI) up 0.6%, to $68.10.

“The strong demand dynamics and likely delays in the Iran nuclear deal negotiations pushed oil prices above the much-watched $70 a barrel level,” said Norbert Rucker, an analyst at Swiss bank Julius Baer. “We expect oil prices to move well beyond $70 a barrel towards midyear.”

Expecting a recovery in demand, oil cartel Opec and its allies, together known as Opec+ agreed on Tuesday to keep to their plan for a gradual easing of supply curbs until the end of July.

Saudi Arabia energy minister Prince Abdulaziz bin Salman said there has been solid recovery in demand from the US and China, and he believes the pace of Covid-19 vaccine rollouts will lead to further rebalancing of the global oil market.

“The market is optimistic that growing summer travel and reopening economies will easily accommodate additional Opec+ production increases and even a possible Iranian return to the market,” said Stephen Brennock of oil broker PVM.

Analysts also say the slow progress of Iran nuclear talks provides an opportunity for demand to rise before Iranian oil returns to the market.

Two Western diplomats and an Iranian official said the talks are likely to pause on Thursday, but it was unclear if they would resume before Iran’s June 18 presidential election.

“The delay is pushing the threat of another 2-million barrels a day of oil [returning to the market] to later in the year, when further economic growth should buffer its impact,” ANZ Research analysts said in a note.

Opec secretary-general Mohammad Barkindo also played down any potential disruption to the market, saying the group expected any return of Iranian exports to “occur in an orderly and transparent fashion” if and when a nuclear deal is reached.

Investors will also be on the lookout for weekly inventory data from the American Petroleum Institute, due later on Wednesday, and from the US Energy Information Administration on Thursday.



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