Brent above $45 for first time in more than two months

The price of Brent oil hit $45 per barrel for the first time in 10 weeks during trading yesterday as energy markets continued to rally after reports of an effective vaccine against Covid-19 and a crude inventory draw in the US.

The benchmark, under which two thirds of the world’s oil is traded, reached $45.29 per barrel before falling back slightly to trade at $44.45 at 8.56pm UAE time.

It was up 1.93 per cent over the previous day’s settlement. West Texas Intermediate, which tracks US crude, was up 2.1 per cent and traded at $42.23 per barrel.

The industry-funded American Petroleum Institute reported that US crude stocks fell by 5.15 million barrels last week, with petrol and diesel stocks also declining, according to a Bloomberg report.

The US government is set to release its official data on oil stocks tomorrow.

The rally in crude prices comes amid higher supply from Libya, which has steadily raised production past 1.1 million barrels per day after a force majeure in place from the start of the year ended.

Meanwhile, Iran, whose oil exports suffered under Washington’s “maximum pressure” strategy, is said to have averaged sales of 700,000 bpd this year, according to the country’s head of budget and planning.

“The average oil sales so far this [Iranian] year have been 600,000 bpd to 700,000 bpd,”

Hamid Pourmohammadi told the Fars news agency. The Iranian year began on March 20.

The Trump administration, which took a hard line against Iran and scrapped the previous administration’s nuclear agreement, is expected to announce new sanctions against Tehran during the transition period.

President- elect Joe Biden, who served as Barack Obama’s vice president and helped to broker the Joint Comprehensive Plan of Action in 2015 that gave Iran access to global financial markets in exchange for nuclear curbs, is expected to revive the deal.

Oil markets have responded positively to Mr Biden’s election and his administration is expected to pursue a greener agenda, curtailing the growth of shale.

UBS commodity analyst Giovanni Staunovo said the markets were sitting on a “wobbly chair”.

With France entering its second lockdown and cases of Covid- 19 surging past 10 million in the US, movement restrictions will remain in place and are expected to hit oil demand.

“Libyan oil production is already above 1 million bpd. With a smaller market deficit in fourth quarter of 2020, these factors [movement restrictions] will keep oil prices vulnerable to renewed setbacks in the short term,” he said.