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Oil prices at highest levels in 4 years

26 September, 2018, 19:54 | Author: Kristi Dunn
  • US sanctions on Iran will tighten global oil supply traders say crude could hit $100 in 2019

"OPEC gave a clear answer to Trump, who criticized the group for pushing for higher prices - they obviously refused to submit", said Satoru Yoshida, a commodity analyst at Rakuten Securities Inc.in Tokyo.

Brent crude futures were down 4 cents at $81.83 a barrel by 0342 GMT, after gaining almost 1 per cent the previous session. Saudi Arabia, Russia and the United Arab Emirates insisted they had the spare capacity to satisfy the market's needs, but wouldn't tap it preemptively.

OPEC's reticence, combined with signs of accelerating supply losses from Iran, created a bullish mood the annual gathering of the Asian oil industry, traders, refiners and bankers in Singapore on Monday.

"The sanctions and the trade wars imposed by some powers will have an impact on the global economy and therefore on the oil market", Novak said on Sunday in his opening notes at the 10th OPEC and non-OPEC Joint Ministerial Monitoring Committee (JMMC) in Algiers, the capital of Algeria, Xinhua reported.

The group broadly agrees that oil prices above $80 a barrel could hurt demand by impairing growth.

Brent, the global benchmark, was up 2.5% to $80.17 a barrel on London's Intercontinental Exchange.

Saudi Arabia Energy Minister Khalid al-Falih told reporters that participating countries have provided over the last three months "a lot of supply to offset decreases" in Iran, Venezuela and Mexico.

When Trump in May announced plans to reimpose sanctions on Iran's oil exports, the market estimated a cut of about 300,000 to 700,000 barrels a day, according to Trafigura's Luckock.

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The Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) as well as top producer Russian Federation are discussing raising output to counter falling supply from Iran, although no decision has been made public yet.

Strong bullish sentiment is boosted by fears on impact from looming U.S. sanctions against Iran as well as OPEC's unwillingness to increase production and support oil markets which may face the shortage in oil supply, once Iran is out.

Trump has called out OPEC publicly, saying the cartel should induce lower prices by boosting production. Bank of America Corp. joined JPMorgan Chase & Co.in predicting higher prices.

"We're on the verge of some significant volatility in Q4 2018 because depending on the severity and duration of the Iranian sanctions, the market simply does not have an adequate supply response for a 2 million barrel a day disappearance of oil from the markets", Jaeggi said.

Trump said last week that OPEC "must get prices down now!", but Iranian Oil Minister Bijan Zanganeh said on Monday OPEC had not responded positively to Trump's demands.

"Oil demand will be declining in the fourth quarter of this year and the first quarter of next year". This time, the deepening trade war between the USA and China threatens economic growth in Asia and turmoil in emerging countries could amplify the impact of higher prices on global demand growth.

"They would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!"

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