Oil prices rose today, underpinned by strong demand during the summer driving season and a pause in talks to revive the Iran nuclear deal that could indicate a delay in resumption of supplies from the OPEC producer.
Brent crude for August gained 23 cents, or 0.3%, to $73.74 a barrel in early trade, while US West Texas Intermediate (WTI) crude for July was at $71.94 a barrel, up 30 cents, or 0.4%.
Both benchmarks have risen for the past four weeks amid optimism over the pace of global vaccinations and a pick up in summer travel.
The rebound has pushed up spot premiums for crude in Asia and Europe to multi-month highs.
"The rebound in demand in the northern hemisphere summer is so strong that the market is becoming increasingly concerned about further sharp drawdowns on inventories," ANZ analysts said in a note.
Negotiations to revive the Iran nuclear deal took a pause on Sunday after hardline judge Ebrahim Raisi won the country's presidential election. Two diplomats said they expected a break of around 10 days.
The election could delay the nuclear deal as Iran has insisted that US sanctions placed on Raisi be removed before an agreement is reached, analysts from ANZ, Commonwealth Bank of Australia and ING said.
However, CBA analyst Vivek Dhar said Raisi's win is unlikely to derail efforts to revive the nuclear deal given the potential economic windfall for Iran if sanctions are lifted.
A deal could see Iran exporting an extra 1 million barrels per day, or 1% of global supply, for more than six months, from its storage facilities.
Oil prices are also drawing support from forecasts for limited US output growth.
OPEC officials have heard from industry experts that US oil output growth will likely remain limited in 2021 despite rising prices, OPEC sources said last week, giving the group more power to manage the market in the short term before a potentially strong rise in shale output in 2022.
"We expect strong demand and supplies to be tight," Phillips Futures analyst Avtar Sandu said, adding investors were looking to the next meeting of the Organization of the Petroleum Exporting Countries with its allies for supply outlook.
Meanwhile, the US oil rig count, an early indicator of future output, rose by eight last week to 373, the highest since April 2020, data from energy services firm Baker Hughes Co showed on Friday night.