Crude futures in New York surged as high as $70 per barrel during early trading on Monday, the first time since October 2018, amid rebounding global economic activity.
Brent, the international oil benchmark, also hit $72.25 per barrel before easing its gains.
WTI, which tracks US crude grades retreated 0.42 per cent to $69.33 per barrel at 8.34am UAE time, while Brent, under which two-thirds of world oil is traded, fell 0.56 per cent to $71.49 per barrel.
The benchmarks have continued to rally after registering a gain of just over 4 per cent last week. 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.
“Rising global oil demand, particularly in the US, Europe and China, remains central to the drawdown in global inventories and the further rebalancing of the oil market,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
The higher prices also follow a vote of confidence last week by Opec+, which reaffirmed its earlier view on global demand growth for crude at 6 million barrels per day. The supergroup, which is led by Saudi Arabia and Russia also held forth on plans to add 2 million bpd back to the markets, in spite of the possible return of Iranian crude back to the markets.
Iran is working to revive its nuclear deal with the US, which will promise oil revenues for its sanctions-hit economy.
“The delay in reaching an agreement is also supporting the oil price,” said Ms Malik.
“A return of Iranian crude is likely to be absorbed by the global oil market given the rebound in demand and tight market fundamentals, albeit resulting in some moderation in prices from the current levels,” she added.