Oil prices continued to rally on Wednesday, with both key crude benchmarks trading above $70 per barrel.
Brent, the international benchmark, was up 0.55 per cent at $72.62 per barrel at 8.32am UAE time. West Texas Intermediate, which tracks US crude grades, was up 0.59 per cent, trading at $70.46 per barrel.
The benchmarks continued to gain amid stronger demand for crude, backed by the reopening of the global economy, particularly the easing of lockdown restrictions across western nations, and resumption of trade flows, is fuelling demand for crude and other commodities.
Oil prices are up about 40 per cent year-to-date and are at their highest since October 2018. The higher prices follow a meeting of Opec+ producers earlier this month, in which they stuck to its previously-announced decision to bring 2 million barrels per day of production back to the market, in spite of concerns about an influx of Iranian production should Tehran finalise its nuclear deal with the US.
Higher prices are also supported by a drawdown in US crude inventory levels, prompting benchmarks to rally to nearly 20-month highs.
"So a rise instead of a fall in inventories tonight could spark a corrective sell-off," Jeffrey Halley, senior market analyst, Asia Pacific at Oanda, cautioned.
Markets also remained buoyant following comments by US secretary of state Anthony Blinken that "hundreds of sanctions" against Iran will continue to hold, as Washington and Tehran try to revive a nuclear deal.
Iran has been working to reinstate a nuclear deal with the US that will allow the oil producer to net much-needed crude revenues for its sanctions-hit economy.
"Fighting talk from US Secretary of State over Iran sanctions helped oil ignore a stronger US Dollar as fears of a flood of post-nuclear-deal Iranian oil hitting markets faded," said Mr Halley.
The crude markets rally would continue as long as Brent was trading above $70 per barrel and WTI held above $68 per barrel, he added.
"Otherwise, inflation data or not, Brent crude should target $75.00 a barrel in the week ahead and WTI $73.00 a barrel," he added.