Expectations of an agreement on the stimulus package for the US economy, together with a weaker dollar in Monday’s session and the diminishing threat of more Iranian exports have prompted the rise of black gold, which is approaching pre-pandemic values.
Oil hit its highest value in more than a year on Monday, breaking the $60 barrier at a time when the prospect of a stimulus package for the US economy is brightening the markets and improving forecasts for the near future.
The barrel of brent was trading at $60.05, up 1.2%, Reuters said. Crude oil, too, is on course to break annual highs soon.
In the next few days Congress may approve a plan involving direct payment of US$1400 to families, as well as increased support for small and medium-sized businesses, in an attempt to stimulate the world’s largest economy, which continues to be heavily impacted by the Covid-19 crisis.
Another factor that has a strong influence on this provision is the strategy of production cuts carried out by the Organization of Petroleum Exporting Countries (OPEC), which has seen large producers, especially Saudi Arabia, substantially reduce the number of barrels produced.
In addition, the general fall in the dollar helped this result by increasing the demand supported in other currencies.
Doubt about Iranian exports also appears to have calmed after new US President Joe Biden made sure that sanctions on the Persian giant would not be lifted because they agreed merely to resume nuclear negotiations. It is recalled that despite being a member of OPEC, Iran has been excluded from the group’s main decisions, with the Saudis adopting the policy of maximum pressure that Trump has put on the country.
However, the Persian isolation within the organisation translates into very little commitment to the cuts imposed by the Saudis. As such, the possibility of a recovery in Iranian production could jeopardise the recovery of the good to pre-pandemic levels, to which it is beginning to move.
