Brent Crude Breaks Above $80 r

Sean Reid
September 26, 2018

Commodity traders Trafigura and Mercuria have also warned that Brent crude prices could rise to $90 per barrel by December and pass $100 in early 2019.

With the US sanctions on Iran taking full effect in early November, the $100-oil scenario could be becoming more realistic.

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.

"Japan will not import any crude from Iran in November because of the USA sanctions", Cosmo Oil President Shunichi Tanaka told Reuters ahead of the Asia Pacific Petroleum Conference (APPEC).

Mazrouei also said that OPEC has spare capacity amid supply cuts in Iran and Venezuela, but he stressed that the oil would only be produced "if there is a demand for it".

However, Khalid al-Falih, who was attending a meeting of oil producers in Algiers, left the way open to a future production hike, as supplies tighten due to Washington imposing sanctions on Iranian oil from November. Brent crude rose above $80 a barrel last week, provoking the USA president to direct his first social-media barb against the cartel since July 4.

President of OPEC Conference Suhail Mohamed Al Mazroui on Sunday stressed that current oil outputs are enough to keep global oil market balanced.

Opec and other producers had discussed raising output by 500,000 barrels a day, Reuters reported. Brent (LCOc1) hit $82.55 per barrel, its highest since November 10, 2014.

Brent crude climbed above US$80 a barrel after OPEC and its allies signaled less urgency to boost output, despite USA pressure to temper prices.

"It is clear that the impact of forthcoming United States sanctions on Iranian oil exports. will be deeper than many had expected", said Peter Kiernan, lead energy analyst at the Economist Intelligence Unit in Singapore. "We will remember. The OPEC monopoly must get prices down now!"

"We think Saudi Arabia, which has the lion's share of global spare capacity, will be hesitant to boost production meaningfully higher despite falling Iranian exports", Glickman said.

"With demand remaining strong in the short term, we still see oil balances constructing higher oil prices".

"Despite OPEC agreeing to increase production with Russian Federation in June, the market continues to tighten".

The OPEC oil cartel raised its global production forecast this weekend based on higher-than-predicted United States output in a report outlining a long-term rise in net demand, particularly in developing countries.

For months, Saudi Arabia had led investors to believe that it was comfortable with Brent crude oil at about $80 per barrel.

"OPEC is struggling to battle through a ideal storm of strong demand and bigger-than-expected supply losses", said Daniel Hynes and Soni Kumari, Commodity Strategists at ANZ Bank last week.

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