On Monday, oil fell to around $64 a barrel as growing supply from OPEC+ and higher Iranian production offset signs of a strong economic recovery in the US and expectations for a wider demand recovery in 2021.
On Thursday, the Organization of Petroleum Exporting Countries and Allies (OPEC+) agreed to monthly output increases from May to July. Iran is also increasing its supply. [OPEC/O] OPEC/O OPEC/O OPEC
By 0905 GMT, June Brent crude had fallen 96 cents, or 1.5 percent, to $63.90 a barrel. The price of May West Texas Intermediate crude in the United States fell 62 cents, or 1%, to $60.83.
“The OPEC+ announcement, which may have been motivated by increased Iranian exports to China, possibly means we've seen the best of the oil rally for the next few months,” said Jeffrey Halley of brokerage OANDA.
Due to record OPEC+ cuts, the majority of which will remain in place after July, and some oil demand growth anticipated in the second half of the year, oil has recovered from historic lows last year.
Although a sluggish vaccine rollout and a return to lockdown in parts of Europe have delayed the recovery, figures released on Friday showed that the United States' economy added the most employment in seven months in March, with all sectors adding jobs.
“OPEC+'s announcement on Thursday has been offset by the seemingly invincible accelerating U.S. recovery,” Halley said.
Investors are based on indirect talks between Iran and the United States as part of efforts to restore the 2015 nuclear agreement between Tehran and global powers, which could potentially lead to further supply.
U.S. sanctions, including limits on Iranian oil imports, are likely to be lifted only after these talks are concluded and Iran returns to compliance, according to Eurasia analyst Henry Rome.
Despite the sanctions, Iran has also increased its exports to China.