Oil Prices Hit $85pb Highest Since 2014

Markets are edgy that an embargo on Iranian crude exports will be harsher than before and wreak havoc on markets. ─ Reuters  File

Oil prices rose more than 1 percent on Friday, with Brent climbing to a four-year high, as US sanctions on Tehran squeezed Iranian crude exports, tightening supply even as other key exporters increased production.

Benchmark West Texas Intermediate, or WTI, crude futures rose to the upper 75-dollar per-barrel range on Monday.

Brent futures were up $1.28 a barrel at $84.01 by 11:38 a.m. EDT (1538 GMT), the highest since November, 2014.

This would be the first highest trade deal hitting above the USD$85 per barrel threshold since November of 2014.

The Organisation of the Petroleum Exporting Countries (OPEC) pumped a 2018 high of 32.85 million barrels per day in September, up by 90,000 bpd from August's revised level.

Donald Trump spoke on the phone Saturday with King Salman bin Abdulaziz of Saudi Arabia, days after the USA president's latest criticism of OPEC. Oil analysts estimate that exports from Iran can be thinner by 1.5 million barrels per day when the new set of U.S. sanctions start.

"There is concern in the market that the loss of barrels from Iran and Venezuela is not going to be made up for through extra supplies from particularly Saudi Arabia and Russian Federation", said Gene McGillian, manager of market research at Tradition Energy. Some market players are predicting the new US-Canada-Mexico free-trade deal will spur more demand.

Iran could lose up to 1.5 million barrels per day when USA sanctions kick in early November.

This is just as the price of crude oil, yesterday surged towards $84 per barrel, the highest so far this year this is as a result of output shortfalls in Iran, now being sanctioned by the United States.

Saudi Arabia, the world's biggest oil exporter and OPEC's de-facto leader, is expected to raise output to the market to offset cuts in Iranian production.

Meanwhile, the latest Reuters survey showed that the OPEC's production boost in September was limited by the declining Iranian oil imports ahead of the us sanctions that are expected to into effect on November 4.

Observed shipments of crude and condensate from OPEC member Iran dropped to 1.72 million barrels a day in September, down 260,000 barrels a day from the previous month, according to tanker-tracking data compiled by Bloomberg.

With oil prices soaring, there are concerns over their inflationary effect on demand growth, especially in Asia's emerging markets where weakening currencies are further adding to high fuel import costs.

Britain's Barclays bank, however, said on Tuesday that "OPEC has ample spare capacity".

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