Oil jumps five per cent to $58.03 after traders stage u-turn over Iran

 
Jessica Morris
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Oil prices jumped today (Source: Getty)

Oil is creeping up again. It bounced after traders wound down their expectations for the return of Iranian oil, and data showed that the months-long rise in US crude inventories was finally showing signs of slowing.

Brent crude, the international benchmark, climbed five per cent to $58.03 after falling as much as four per cent on Thursday. There had been no trading on Friday as markets were closed for the start of the Easter holiday.

Iran hammered out a preliminary deal over its controversial nuclear programme with six powers on Thursday. While analysts said Iranian oil will flood onto the global markets if a comprehensive deal is struck in June, a number of officials have warned the preliminary agreement doesn't guarantee a final deal.

Additionally, while an increase in supply would add even more downward pressure to oil prices, market commentators cautioned they don't expect Iran's return as an oil producer to affect markets until next year.

"People betting on Iran's oil arriving tomorrow realize they may have to wait up to a year," said Phil Flynn, analyst at Price Futures Group in Chicago told Reuters.

The weak dollar, which followed a dismal jobs report out of the US on Friday, also lent support to oil prices. This is because oil is priced in dollars, and when the dollar is weak, other currencies can buy more for less.

Concerns over the conflict in Yemen, where fighting between Saudi-backed coalition and Shi'ite Houthi forces continues, also buoyed oil prices.

Oil prices shed around 50 per cent of their value last year, sliding from a peak of around $115 per barrel in June. This was driven by increased production on the back of the US shale gas revolution, as well as waning demand.

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