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Oil prices have risen again, suggesting that crude oil could reach $ 100 a barrel for the first time since the crash of 2015.
Brent crude oil, a global benchmark for oil prices, jumped 4.1% in the third quarter to $ 82.72 a barrel, its highest level in almost four years. The fifth consecutive quarter of Brent marks its longest progression since 2008. US crude declined slightly by 1.2% to 73.25 dollars last quarter, while it had increased in five of the last six weeks. Investors were more optimistic than November 4, the deadline set by the United States for companies to stop buying Iranian oil.
The recent decision by the Organization of Petroleum Exporting Countries and its allies to keep production afloat has reinforced sentiment. According to analysts, this decision has convinced investors that the withdrawal of Iranian oil from the market, as well as supply disruptions in countries such as Venezuela, will lead to significant shortages of crude oil.
The result: Brent is up 24% since the beginning of the year and West Texas Intermediate, the American gauge, has increased by 21%.
"When you have a geopolitical risk environment like this, it fuels bullish market sentiment," said Michael Cohen, Head of Energy Commodities Research at Barclays. "Market fundamentals tighten before some people expect it."
Investor confidence in the recovery of the US economy and the strength of the US economy will continue to keep fuel consumption at record levels. This belief sparked calls for oil prices to hit $ 100 again, a level that Brent has not reached since September 2014.
Some men attended an OPEC meeting in Algiers on 23 September.
Photo:
str / epa-efe / rex / EPA / Shutterstock
While Brent is expected to increase another 21% to the $ 100 level, it's not a gossip: the upside options that bring in $ 100 in Brent in January rose more than 62% last week. 27 by the QuikStrike show.
The oil rally also attracts speculators. Hedge funds pushed up net bakes on Brent for five consecutive weeks, pushing them to their highest level since May in the week ending September 25, according to ICE data .
Some analysts estimate that about one million barrels a day of about 2.5 million barrels a day of oil exports could ultimately be threatened by US sanctions, removing more oil from the market after the fall. Iranian deliveries.
Saudi Arabia, the world's largest oil and de facto producer at the head of OPEC, insisted that it could fill any supply gap created by sanctions imposed by Iran. Some analysts believe, however, that recent increases in production by large suppliers and disruptions in production have eroded global reserve capacity, as production can be quickly activated in an emergency.
"Without unused capacity, OPEC is relatively powerless in preventing price hikes," said Richard Robinson, director of the Ashburton Global Energy Fund.
In the United States, bottlenecks related to pipelines and labor shortages, particularly in prolific areas such as the Permian Basin, have prevented production from growing rapidly, US prices.
Traders are also preparing for a price spike that could drive up retail petrol prices in the United States.
How much pump pain could lead to greater uncertainty in oil policy, especially before the November 6 midterm elections. While President Trump in May announced that his administration would reinstate sanctions against Iran avoided the side effect of rising fuel prices, as oil prices retreated this summer, Saudi Arabia Arabia and Russia have increased their production before reviving.
Average gasoline prices in the United States have also been largely stable after approaching $ 3 a gallon earlier this year, their highest level since 2014.
If gas prices rise, some analysts believe that the Trump administration could be subject to political pressure, for example by granting exemptions to companies seeking to buy Iranian oil or to withdraw to the oil reserve strategic. Historically, the latter has been considered as an option of last resort to contain price increases.
If the conflict with Iran soars, "I do not see any barrier for oil prices reaching $ 100 a barrel," said Matt Badiali, research analyst at Banyan Hill Publishing. "As for the holiday season, it would be very frustrating for the American consumer."
Apart from consumers, more expensive oil could threaten US corporate profits and indirectly raise prices for various goods. If this fueled inflation, the Federal Reserve could feel pressure to accelerate its rate of rise in interest rates.
Of course, the oil market is notoriously volatile. Some investors expect Saudi Arabian and Russian production to cool the current recovery, which occurred this summer after prices rose in June.
Global markets have also largely ignored the risk of an escalating trade dispute between China and the United States, which could hinder global growth and hurt crude oil demand.
Measures to intensify or calm the conflict could also influence oil positions towards the end of the year.
"I do not think anyone can anticipate how it will all be in the next two months," said Cohen of Barclays.
Christopher Alessi and Gunjan Banerji contributed to this article.
Write to Amrith Ramkumar at [email protected]
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