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Futures Movers: Oil pushes higher on demand optimism as traders watch Iran talks

Oil futures rise Tuesday, finding support on continued optimism over a revival in demand and doubts that the U.S. would rejoin the Iran nuclear deal ahead of that country's presidential election at the end of the week. Read More...

Oil futures rose Tuesday, finding support on continued optimism about recovering demand and doubts that the U.S. would rejoin the Iran nuclear deal ahead of that country’s presidential election at the end of the week.

West Texas Intermediate crude for July delivery CL00, +1.21% CLN21, +1.21% rose 64 cents, or 0.9%, to $71.52 a barrel on the New York Mercantile Exchange. August Brent crude BRN00, +1.06% BRNQ21, +1.06%, the global benchmark, gained 68 cents, or 0.9%, to trade at $73.54 a barrel on ICE Futures Europe.

The Trump administration withdrew the U.S. from the Iranian nuclear agreement in 2018, reimposing sanctions that have limited Iran’s exports. Tehran responded by breaching nuclear enrichment limits under the treaty. The U.S. isn’t a direct participant in talks aimed at seeing Iran move back into compliance with the agreement, but the Biden administration has signaled that it would be prepared to rejoin an agreement that sees Tehran agree to abide by the terms.

Iran’s presidential election takes place on Friday. Hard-line cleric Ebrahim Raisi is seen as the clear favorite, analysts said, after Iran last month disqualified dozens of candidates, including moderates and reformers.

Read: Why Iran’s presidential election is the ‘most important political milestone’ of 2021 for the global oil market

Meanwhile, if the nuclear talks “drag on, there is the potential for a new government taking a different approach with the negotiations, which could possibly further delay any deal,” said Warren Patterson, head of commodities strategy at ING, in a note.

“We are assuming that Iranian supply increases from 2.4 million barrels a day currently to 2.6 million barrels a day over 3Q21 and then to 3 million barrels a day in 4Q21,” Patterson wrote. “ If talks do drag on into 2H21, this supply is at risk.”

That would mean, however, that other members of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, would have more room to boost output later this year, he said.

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