Oil prices touch four-year high

Irving Hamilton
September 25, 2018

The OPEC oil cartel raised its global production forecast on Sunday based on higher-than-predicted U.S. output in a report outlining a long-term rise in net demand, particularly in developing countries. Iran disagreed and Kazempour maintained that position on Monday.

Iran, OPEC's third-largest producer, has accused Trump of orchestrating the oil price rally by imposing sanctions on Tehran and accused its regional arch-rival Saudi Arabia of bowing to U.S. pressure.

For consumers, that could mean higher gas prices on the way, but it's good news for Canadian oil producers and helped boost stock prices in Toronto today.

On Monday morning, Brent crude, the main European futures contract, rose above $80 USA a barrel to $80.43 U.S. at mid-morning.

Commodity traders Trafigura and Mercuria said they expected Brent crude to climb above $90 by Christmas and to pass $100 early in 2019. J.P. Morgan said U.S. 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. "In my view, that makes it conceivable to see a price spike north of US$100 a barrel". Output in Venezuela is also slumping due to an economic crisis.

The U.S. shale oil boom has dramatically reshaped the energy landscape turning the country into a major oil producer - on track, in fact, to be the largest producer this year according to the Energy Information Administration.

Pete Davidson Explains How He Began Dating Ariana Grande
As for the couple getting together, Davidson explained it's all thanks go to Grande's manager, Scooter Braun . "Timing I feel like is everything, and we both were in a similar situation at the same time", he said.

Furthermore, the commodity has also rallied in the wake of United States sanctions on Iranian oil exports and fears about OPEC-member depletion rates.

It's a tough balancing act with President Donald Trump calling for OPEC to increase production to push prices down.

"I do not influence prices", Saudi Energy Minister Khalid al-Falih told reporters on Sunday. However, Saudi Arabia and Russian Federation now say they have no more capacity.

Oil at US$100 may not be sustainable in the longer-term because demand may be threatened by the U.S. Early last week, the market was supported by a report which said Saudi Arabia would be comfortable with Brent prices over $80 a barrel.

But if prices really are expected to rise sharply in the coming months on the back of the US sanctions against Iran, it may make sense to buy longer-dated oil at the current prices.

But once the US sanctions on Iran take full effect, it will become clearer whether the Saudis are correct that the market is well-supplied, or whether the traders have picked a victor in tipping higher prices. That's the highest price for Brent since it touched $80 a barrel briefly in May.

Other reports by

Discuss This Article