Economy

Brent Oil Outlook: hits new four-year high in strong bullish environment

Brent Oil Outlook: hits new four-year high in strong bullish environment

Brent crude climbed above $80 a barrel to its highest level since November 2014 after OPEC and its allies signalled less urgency to boost output, despite USA pressure to temper prices.

Brent crude, the benchmark for more than half the world's oil, was trading up 1.6 percent at $80.02 a barrel at 1:34 p.m. Singapore time.

USA light crude was $1.25 higher at $72.03 on Monday.

In the meeting, the committee stated that the "current oil market outlook" was satisfactory, with an "overall healthy balance between supply and demand".

Saudi energy minister Khalid al-Falih said at a press conference in Algiers that he did not "influence prices".

J.P. Morgan says per cent sanctions on Iran could lead to a loss of 1.5 million bpd, while Mercuria warned that as much as 2 million bpd could be knocked out of the market.

Nearly 2 million barrels per day (bpd) of crude could be taken out of the market as a result of the U.S. sanctions against Iran by the end of the fourth quarter this year, said Daniel Jaeggi, president of commodity merchant Mercuria Energy Trading, making a crude price spike to US$100 a barrel possible.

Representatives from member nations of the Organization of the Petroleum Exporting Countries, and non-OPEC countries such as Russian Federation, gathered in Algeria on Sunday.

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A source familiar with Opec discussions told Reuters on Friday that Opec and other producers have been discussing the possibility of raising output by 500,000 bpd.

"Iran will lose sizeable export volumes, and given OPEC+ reluctance to raise output, the market is ill-equipped to fill the supply gap", Harry Tchilinguirian, global head of commodity markets strategy at French bank BNP Paribas, told the Reuters Global Oil Forum on Tuesday.

Major oil trading houses are predicting the return of $100 crude for the first time since 2014 as the market braces for the loss of Iranian supplies because of US sanctions.

OPEC also decided on Sunday to adjust the dates of its next meeting to December 6-7 from the earlier-agreed December 3.

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. With upside momentum picking up, we expect to hear more criticism from President Trump, but other than some light profit-taking, his comments are not likely to have much of an effect on the price action.

Higher gasoline prices for US consumers could create a political headache for Trump before November mid-term congressional elections.

Of course, the OPEC member most eager to take a stab at Trump was Iran, and Hossein Kazempour, OPEC representative for the Islamic Republic, did so by telling media that the brash billion aires incendiary tweets "are doing actually is [leading to] higher prices because the fundamentals even do not warrant this level of prices".