Algiers — Global vaccination campaigns and the resumption of international air traffic will support oil prices within $55-$60/b in the near term, but OPEC will be closely watching for clearer signals from new US President Joe Biden on whether he will ease sanctions on Iran and Venezuela, Algerian Energy Minister Abdelmadjid Attar said Jan. 21.
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Any sanctions relief could unleash crude volumes that would complicate the producer bloc's efforts to rebalance the market amid a still fragile global recovery from the coronavirus pandemic.
"Right now, that's the big unknown," Attar said in an interview with Russian news agency Sputnik, adding that the next few weeks will be "decisive" for the oil market, which should be "very attentive" to the decisions of the Biden administration.
Biden has said he would seek to restore the nuclear deal with Iran, though political opposition from hardliners in both Washington and Tehran could gum up the works.
Iran's crude production has roughly halved to about 2 million b/d in recent months since former President Donald Trump pulled the US out of the nuclear pact in May 2018 and reimposed sanctions.
S&P Global Platts Analytics forecasts that Iranian crude supply could grow 500,000 b/d between June and December, assuming a new agreement is forged by late 2021 and that the Biden administration is not as stringent about policing sanctions enforcement as the Trump administration.
Venezuela's prospects of sanctions relief appear less promising, and the country's deteriorating infrastructure would make any significant production rebound a tall prospect. Venezuela pumped an average of 500,000 b/d in 2020, according to S&P Global Platts survey of OPEC production, down from 2.34 million b/d in 2015.
OPEC, Russia and several other allies have instituted deep production cuts to support prices through the coronavirus crisis.
Saudi Arabia surprised the market by announcing Jan. 6 that it would cut an additional 1 million b/d in February and March to help drain inventories that had built through the pandemic.
Attar said the move may help accommodate the return of Iranian crude.
"Riyadh seems to be preparing for new American decisions," Attar said.