Oil prices near 2-year highs above $70 as investors expect OPEC+ to confirm its supply policies

• Oil prices rose above $70 barrel and neared a 2-year high on Tuesday.
• Investors are expecting OPEC+ to confirm it will keep restricting supply at a key meeting.
• Iranian geopolitics and post-pandemic economic recovery have also been impacting prices.

Oil prices traded near two-year highs on Tuesday, pushing Brent crude above $70 a barrel. Investors are expecting OPEC+ to confirm that they will continue to raise production only gradually over the coming two months, thereby implying no change in the their current policy, at a meeting on Tuesday.

Brent crude was trading around $70.81 per barrel at 05:33 E.T, up 2.15% on the day. This was the first time prices have risen above the $70 mark since March, when Brent briefly rose above $71. Oil futures last traded at these levels in 2019, well before the Covid-19 pandemic broke out. WTI futures were last trading at $68.17, up 2.79%.

News of Iranian oil being released into the market after progress was made on the country's nuclear deal has dominated markets of late and caused oil prices to wobble briefly last week, as investors weighed up how well the market would absorb any sudden increase in supply.

"If this early Iran barrel scenario were to materialize, the market would be able to absorb the mini supply shock as economies pull out from lockdown and oil demand normalizes. An early Iran deal would therefore not disrupt the bullish cycle we anticipate for the remainder of the year but would be a bump in the road," Louise Dickon, oil markets analyst at Rystad Energy, said.

The oil market has been heavily impacted by post-pandemic economic recovery. Extensions of lockdowns and travel restrictions have notably caused prices to drop because of the impact on oil demand.

Demand is predicted to keep increasing as restrictions ease and the spread of Covid-19 slows. OPEC is planning to release an additional 2 million barrels per day by July, according to Bloomberg. However, Dickson believes will still mean global supply falls short of demand, especially over the summer months as people start travelling more. OPEC+ therefore may revise its stance on production and its current predictions in the coming weeks, Dickson said.

Looking ahead, Dickson said prices could accelerate significantly. Compared to managing the sudden drop of oil demand at the start of the pandemic, "producers now have just as delicate of a task to bring back enough supply to match the swiftly rising oil demand. A failure to keep up with oil demand would overheat an already tight oil market, and cause a very volatile upward price gyration."