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Brent crude crosses $80 as Opec rejects Trump's call for oil output boost

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

Samuel Robinson | Bloomberg 

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Brent crude climbed above $80 a barrel after and its allies signalled less urgency to boost output, despite U.S. pressure to temper prices.

Futures in London rose as much as 2.7 per cent to its highest level since November 2014. and its partners gave a chilly response to President Donald Trump’s demand that rapid action be taken to reduce prices, saying they would boost output only if customers seek more cargoes. Brent could rise to $100 for the first time since 2014 as the market braces for the loss of Iranian supplies due to U.S. sanctions, according to Mercuria Energy Group Ltd. and Trafigura Group.

"did not guarantee that they would automatically replace lost Iranian barrels of oil due to sanctions," said Bob Yawger, director of the futures division at Mizuho Securities USA. "Now you have the corresponding disappointment in the market, oil’s rally as a result and a four-year high in Brent."

Oil has climbed since early August as speculation swirls over whether the and its allies will boost production, with sanctions on the Middle East nation’s exports set to take effect in November. Bank of America Merrill Lynch joined & Co. in anticipating higher prices down the line -- the former expects crude to reach $95 a barrel in the first half of next year.

Brent crude crosses $80 as OPEC rejects Trump's call for oil output boost

Brent for November settlement rose $1.81 to $80.61 a barrel on the ICE Futures Europe exchange at 10:47 a.m. in New York. The global benchmark traded at an $8.44 premium to West Texas Intermediate for the same month.

WTI for November delivery rose $1.39 to $72.17 on the New York Mercantile Exchange.

“It’s tearing higher,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S. “Technicals and fundamentals seem to be pointing in the right direction at the moment and that can be quite a potent cocktail.”

signalled the kingdom is in no rush to bring oil prices down from current levels. “The market is well-supplied,” Saudi Energy Minister Khalid Al-Falih said after a meeting of Opec and its allies over the weekend. “The reason didn’t increase more is because all of our customers are receiving all of the barrels they want.”

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The lack of Opec’s immediate action could mean higher prices. Brent crude may spike to over $100 in the fourth quarter because the market doesn’t have much capacity left to replace Iranian supplies, Mercuria co-founder Daniel Jaeggi said at the annual Asia Pacific Petroleum Conference in Singapore on Monday. Trafigura co-head of oil trading Ben Luckock said at APPEC that he sees $90 oil by Christmas and $100 in early 2019.

First Published: Mon, September 24 2018. 21:06 IST
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