Oil traders say $100 coming as OPEC struggles to fill Iran gap

Oil traders say $100 coming as OPEC struggles to fill Iran gap

Iranian Oil Minister Bijan Zanganeh also said on Sunday he hoped decisions taken by the OPEC and non-OPEC ministerial committee would not be affected by U.S. President Donald Trump's tweets on oil producers.

A mid-term report released by OPEC on Sunday forecast that non-OPEC supply from countries led by the United States would rise by 2.4 million bpd in 2019 while global oil demand should grow by just 1.5 million.

With U.S. sanctions against Iran, the third-largest producer in OPEC, looming, U.S. investment bank J.P. Morgan said in its latest market outlook that "a spike to $90 per barrel is likely" for oil prices in the coming months.

With Brent crude already jumping to an nearly four-year high on Monday, that's exactly the kind of price surge President Donald Trump has been seeking to prevent by pressuring the Organization of Petroleum Exporting Countries to raise production.

It could prompt Washington to consider extraordinary measures, including the use of the Strategic Petroleum Reserve, to cool down fuel prices ahead of the USA mid-term elections.

Saudi Arabia successfully negotiated limits on oil production 18 months ago in an effort to get oil prices higher and boost government coffers, which had suffered from an extended period of cheaper oil.

Earlier today, Brent crude hit its highest since May at $80.62 per barrel, up $1.82 or 2.3 percent, by 0830 GMT.

Mema slams Trump's latest tariffs
This means the additional levies will hit more than half of U.S. goods from China - its largest source of imports. China's leadership is in a hard position, said Eswar Prasad, professor of trade policy at Cornell University.

It also steeply raised USA oil output growth estimates to 2023, predicting OPEC would lose further market share.

"Our plan is to meet demand", said Saudi Energy Minister Khalid Al-Falih.

Seeking to reverse a downturn in oil prices that began in 2014, Opec, Russia and other allies decided in late 2016 to reduce supply by some 1.8 million barrels per day. "We in Saudi Arabia have not seen demand for any additional barrel that we did not produce".

This, the official added, would not change given that Russia's production would decline over the cold months of the year.

The September quarter of the year is typically the strongest for global crude demand, a situation that has been exacerbated this year by the looming reintroduction of economic sanctions on Iran from early November, including the nation's crude exports, contributing to recent strength in prices.

Speaking to Bloomberg, Zanganeh warned that some oil producers are trying to create an alternative suppliers' forum that supports USA policies hostile to the government in Tehran. "They got prices higher and they are going to get them higher still".

"Balances are precarious and the lack of spare capacity could see crude pricing well above US$90 or even US$100, should all of the potential risk in the market materialize", analysts including Ed Morse said in the note.

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