
Oil price jumps as Opec keeps output steady
Oil prices jumped more than 2 percent to a four-year high on Monday after Saudi Arabia and Russian Federation ruled out any immediate increase in production despite calls by U.S. President Donald Trump for action to raise global supply.
Brent crude futures were up 87 cents, or more than 1 percent, at $82.07 a barrel by 10:43 a.m. EDT (1443 GMT) having touched a session peak of $82.22, the highest price since November 2014.
However, Saudi Arabia's influential oil minister Khalid al-Falih left the way open to a future production hike, as supplies tighten due to the U.S. imposing sanctions on Iranian oil from November this year.
New inventory data from the US Energy Information Administration and Department, which will be released later this week, will be crucial in deciding the price curve.
In a speech, Mohammad Barkindo, OPEC secretary general, said the organisation would "work hard to ensure a sustainable stability in the global oil market, enabling steady and lasting economic growth across consuming and producing countries".
Ben Luckock, co-head of oil trading at fellow merchant Trafigura said crude oil prices could rise to $90 per barrel by Christmas and to $100 by the New Year as markets tighten.
Abdelmoumen Ould Kaddour, chief executive officer for Algeria's state-owned Sonatrach Group, told media that "Trump tweets are disturbing, but fortunately this time he did not have an impact on the OPEC decision; the price of oil is subject to many variables, not only the tweet from the president of the U.S".
Fund managers are betting the introduction of sanctions on Iran will result in a shortage of seaborne crude on global markets even while the landlocked US inland market remains plentifully supplied.
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Algiers meeting is expected to extend the 2016 agreement to an additional period to maintain prices at the current level.
"Depending on the severity and the duration of the Iranian sanctions, the market simply does not have an adequate supply response for 2 million b/d of oil disappearing from the market". The Saudis, it is said, are not comfortable with the fact that Brent crude is more than $80, because Trump will be upset about such a development.
Officials from the Organization of the Petroleum Exporting Countries and allies including Russian Federation, meeting in Algiers, said that they increased production in recent months, and customers now have adequate supplies.
"It's hard to believe that the Saudis won't answer the call at some point, especially if prices tick much higher", said John Kilduff, a partner at Again Capital in NY.
The price rally mainly stemmed from a decline in oil exports from OPEC member Iran due to fresh USA sanctions.
The agreement by OPEC and other producers led by Russian Federation in November 2016 to restrain oil production has contributed to a almost 20% rise in Brent crude prices this year, Kallanish Energy finds.
"Given the numbers we saw today, that [an output increase in 2019] is highly unlikely unless we have surprises on the supply and demand", Falih said, Reuters reported.
Notably, the bank increased its estimate of supply losses from Iran 1 million barrels per day (mb/d), up from 500,000 bpd previously.
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