Oil hits four-year high as OPEC, allies maintain supply cut
Oil hits four-year high as OPEC, allies maintain supply cut
Crude prices are spiking
26 September, 2018, 14:53
However, reports surfaced last week saying that it now would have no problem with Brent trading north of $80 per barrel.
Oil prices hit a four-year high of $81.48 a barrel on Tuesday after Saudi Arabia and Russian Federation appeared to reject calls from the USA to increase production amid looming sanctions against Iranian oil.
"We will consider waivers where appropriate but it is our expectation that the purchases of Iranian crude oil will go to zero from every country or sanctions will be imposed", Pompeo said earlier this month.
J.P. Morgan wrote in its latest market outlook "a spike to $90 per barrel is likely" in the coming months due to US sanctions on Iranian oil exports, which have fallen dramatically in recent months as importers brace for the impending penalties.
Looming US sanctions against Iran and the unwillingness or inability of the Organisation of the Petroleum Exporting Countries (Opec) and top oil producer Russian Federation to raise output to offset the loss of Iranian supply have spurred prices higher.
OPEC said in a statement that it was satisfied with "the current oil market outlook", citing what it said was "an overall healthy balance between supply and demand".
Oil prices have been rising since early 2017, when the Organization of the Petroleum Exporting Countries (OPEC) together with other suppliers including Russian Federation started withholding output to lift crude values. "We (Iran) are continuing to produce our share of production", he said. Russia's energy minister Alexander Novak on Sunday appeared to back a continuation of the partnership between OPEC and non-OPEC member states.
At the meeting in Algeria next Sunday, the Saudis hope to achieve their goal of making the alliance, formed two years ago to end the devastating oil price decline, more durable before the next big meeting in December.
In August, OPEC and its allies cut production by 600,000 bpd more than their pact required, mainly as a result of falling output in Iran as customers in Europe and Asia reduced purchases ahead of the United States sanctions deadline.
Ashley Kelty, oil analyst at financial services firm Cantor Fitzgerald said crude could soon hit $90 per barrel.
Trump stated in a tweet on Thursday that OPEC needs to lower prices because of the military security the U.S. provides for the countries of the Middle East. While the bank's projection for global crude demand remains unchanged, it expects to see further drops in supply and a wider deficit, from 300,000 to 400,000 barrels a day.
Trump first blamed OPEC for rising oil prices in April.
Hedge funds and other money managers raised their combined net long position in the six most important petroleum contracts by just 3 million barrels to 1.049 billion barrels.
Mercuria Energy Group Ltd.co-founder Daniel Jaeggi said prices may spike to over $100 a barrel in the fourth quarter because the market doesn't have much capacity left to replace more than 2 million barrels a day of Iranian exports that could be lost to sanctions.
CME's announcement comes after rival Intercontinental Exchange said in July it would offer a Houston crude futures contract.
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