Oil Prices to Be 'Cheaper' if Trump Stops Tweeting, Iran Official Says

Lloyd Doyle
September 25, 2018

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.

Brent crude hit its highest since November 2014 at $80.94 a barrel, up 2.7%, before falling back to $80.49.

USA commercial crude oil inventories (C-STK-T-EIA) are at their lowest since early 2015 and although US oil production (C-OUT-T-EIA) is near a record high of 11 million barrels per day (bpd), subdued US drilling activity points towards a slowdown in output.

Major oil trading houses are predicting the return of US$100 crude for the first time since 2014 as OPEC and its allies struggle to compensate for USA sanctions on Iran's exports. U.S. light crude was $1.25 higher at $72.03.

Hosted in Algiers, Sunday's meeting was a gathering of the Joint Ministerial Monitoring Committee (JMMC) of members from the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producing countries, including Russian Federation.

Dated Brent could see the biggest overhaul since the North Sea crude became a benchmark more than 30 years ago as S&P Global Platts considers including oil from as far away as Central Asia, West Africa and US shale fields in its price assessment.

The decision on Sunday was effectively a rebuff to US President Donald Trump, who has called for immediate action to raise global supply.

Oil has rallied since the lows of August as speculation swirls over whether OPEC and its allies will boost production, with sanctions on the Middle East nation's exports set to take effect in November.

Saudi Energy Minister Khalid Al Falih also ruled out the need to use spare capacity to increase oil output.

ALGIERS-U.S. shale oil production will peak by the late 2020s, triggering renewed demand for OPEC crude after an expected decline and stagnation, the oil cartel said Sunday.

Those fears have sent crude oil prices higher, with commodity traders Trafigura and Mercuria predicting prices could rise to more than $100 a barrel by early next year.

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

"The Trump administration is pushing politics into the OPEC (Organization of Petroleum Exporting Countries), and is aiming at spreading the members and securing their own interests by getting lower prices and so forth", Hossein Kazempour, Iran's OPEC representative, told CNBC on Sunday.

Crude oil futures have spiked in early Asian trade, gaining more than 1%.

"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.

Other reports by Iphone Fresh

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