Oil was down Friday morning in Asia but remained above $70-market after the U.S. Federal Reserve projected possible interest rate hikes earlier than expected.
The dollar has soared in the two sessions after Fed expected possible interest rate hikes in 2023, curbing oil demand.
In the short term, crude demand is increasing as some countries continue their economic recovery from COVID-19 and are easing COVID-19 restrictions. However, the prospective interest rate hikes will impact the growth outlook in the long term and eventually hurt oil demand, Westpac senior economist Justin Smirk told Reuters.
"The near term's all very positive. The question is how much further can it rise, how much scope is there if you're looking at an environment where interest rates are going to rise," Smirk added.
Meanwhile, the U.K. reported 11,007 new infections on Thursday, its biggest daily rise in the number of COVID-19 cases since Feb. 19.
On the supply side, Iranian Deputy Foreign Minister Abbas Araqchi said that talks between Iran and the U.S. to revive the 2015 Iran nuclear deal have come closer than ever to an agreement.
"We achieved good, tangible progress on the different issues .... we are closer than ever to an agreement but there are still essential issues under negotiations," he added.
"Renewed negotiations have sparked concerns that this would lead to the U.S. removing sanctions, resulting in a flood of oil hitting the market…despite this, fundamentals suggest the market remains tight " ANZ Research analysts said in a note.
Investors also await the results of Iran's presidential election, due to take place later in the day.