Oil price rises as markets tighten ahead of Iran sanctions

The Organization of the Petroleum Exporting Countries and non-OPEC states, including top producer Russian Federation, gathered in Algiers on Sunday for a meeting that ended with no formal recommendation for any additional supply boost to counter falling supply from Iran.

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.

Trump has repeatedly called for a hike in production by countries other than Iran to reduce oil prices, which have partially recovered since the December 2016 agreement, to trade close to $80 per barrel this month.

Brent for November settlement rose as much as US$2.14 to US$80.94 a barrel on the ICE Futures Europe exchange and traded at US$80.66 at 9:58 a.m.in London.

Prices picked up a bid after OPEC snubbed the US President Trump's demand for lower oil prices.

"Decisions can only be made at OPEC meetings in the presence of all OPEC members and by consensus of members", he noted.

In addition to USA sanctions cutting Iranian supply, the world is also dealing with a decline in Venezuelan oil production due to an economic crisis in the Latin American nation, according to Trafigura's Luckock.

The bank said it expects Brent and WTI to average US$85 and US$76 per barrel, respectively, over the next six months.

"The biggest issue is not with the producing countries, it's with the refiners, it's with the demand".

For all these urgent supply pressures, the world's largest oil producers adopted a sit-back-and-wait approach at their meeting in the Algerian capital on Sunday. "The reason Saudi Arabia didn't increase more is because all of our customers are receiving all of the barrels they want".

Oil at US$100 may not be sustainable in the longer-term because demand may be threatened by the U.S.

Wall Street bankers and hedge funds also saw some caveats to the bullish mood.

Those are the highest prices since December of 2014, just before oil began its slide that took it down to $40 United States a barrel in 2015, discouraging investment in the oil patch.

Crude oil prices gapped higher from weekend trading, in response to announcements from delegates of the Organization of the Petroleum Countries and allied governments crossing the newswires. That was the highest level since November 12, 2014.

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