Over the past week, money managers have turned even more bullish on oil prices, betting that Brent Crude prices will further rise amid expectations that OPEC and friends can't or won't fully offset the supply gap in Brent-linked oil cargoes with the USA sanctions on Iran. U.S. West Texas Intermediate (WTI) crude futures CLc1 were off 7 cents at $75.23 a barrel, after earlier touching a four-year high of $75.91. WTI has risen around 18% since mid-August.
The price of Brent crude climbed to more than $83 a barrel on Monday morning, reaching a level not seen since oil prices last peaked in 2014.
Futures rose as much as 0.4 percent in NY after closing Monday at the highest since November 2014.
Iran's oil minister reiterated on Tuesday that U.S. President Donald Trump was responsible for rising oil prices, and warned that the only way to bring balance to the market was to suspend sanctions on Tehran. It should be noted that the call to reduce oil prices comes from a major exporter, as USA oil production is booming at record levels with exports surpassing most OECD countries.
"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.
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As of the moment, the market's focus is on the looming sanctions of Washington on Iran, which is slated to take a full swing by November 4 this year. Some market players are predicting the new US-Canada-Mexico free-trade deal will spur more demand.
The Organization of the Petroleum Exporting Countries (OPEC), of which Iran is a member, has struggled to replace export falls from Iran, according to a Reuters survey published on Monday. U.S Energy Secretary Rick Perry has ruled out using US strategic crude reserves to lower oil prices. Meanwhile, Brent oil price for December delivery climbed up 2.25 US dollars to 84.98 USA dollars per barrel.
Given that OPEC and Non-OPEC rebuffed President Trump's demands to boost oil production in order to offset the loss of supply from Iran and Venezuela suggests that oil prices may continue to track higher.
Brent oil price climbed to a four-year high ahead of United States sanctions against major producer Iran.