Israel's Bank Leumi reported on Sunday that they expect oil prices to rise in the short-term and to fall later on in 2021 after a renewed rise in supply.
Discussing the expected rise, Dr. Gil Michael Befman, Leumi's chief economist, said that "Oil prices have continued to rise almost continuously since the beginning of May 2021. BRENT oil reached $72.3 a barrel at the end of the trading day on 11/6/ 2021 and the price of a WTI barrel reached about $70.9, against the background of the continued rise in global demand."
Befman added that due to renewed global travel as the pandemic dies down, the demand for fuel for cars and planes will likely contribute to the rise in oil prices.
"Demand for oil in Europe continues to recover with the return of vehicles to the roads which increases the demand for fuel, which comes against the backdrop of halting the spread of the coronavirus in some countries, alongside the recovery in economic activity," said Befman.
The drop in prices in the latter half of 2021, Befman noted, will be due to an increase in oil production by OPEC states and the prospects of lowered tensions with a new US-Iran nuclear deal.
"The rise in oil prices was supported by the OPEC Group's announcement in early June to maintain the predefined moderate route of increasing supply, despite the recovery in global demand. The group's announcement did not yet address significant progress in US-Iran nuclear negotiation efforts."
"If an agreement is signed and the sanctions on Iran's energy sector are reduced, it could lead to an increase in the oil supply in the market, probably gradually, by about 2 million barrels a day. This move, if realized, is expected to lead to a further drop in oil prices," Befman added.