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LONDON – Oil prices rose Tuesday morning, after reaching the highest level reached in four years following the decision made by OPEC last weekend and its production allies to maintain their current production targets .
Brent, the global benchmark, rose 0.9% to $ 81.28 a barrel on the London market.
Intercontinental exchange
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On the New York Mercantile Exchange, West Texas Intermediate futures rose 0.6% to $ 72.51 per barrel.
Meeting Sunday in Algiers, the Organization of Petroleum Exporting Countries and its production allies, led by Russia, reiterated their desire to meet the production quotas in effect for the first time in early 2017. As producers had agreed at the beginning of the summer to remove compliance with the original agreement.
However, producers have refused to announce specific plans to further increase production, apparently challenging President Donald Trump's calls for the cartel to increase production in order to cap prices, driving up prices on Monday.
OPEC and Russia's public comments have "shown comfort and satisfaction with today's price levels and a reluctance to boost production," said Norbert Ruecker, Head of Macroeconomic Research. and raw materials at Julius Baer. "Supply problems are increasing as the embargo on Iran approaches, supporting oil prices," he added.
UAE Energy Minister, Suhail bin Mohammed al-Mazroui, and OPEC Secretary General, Mohammed Barkindo, at the Algiers meeting.
Photo:
ramzi boudina / Reuters
US sanctions on Iranian oil exports are expected to come into effect on Nov. 4, raising concerns about a tightening of global supply by the end of the year. Saudi Arabia – the de facto leader of OPEC – and Russia said they could produce more to fill the gap, despite concerns over dwindling unused capacity. But there is still disagreement about how the cartel and its allies should contain crude prices once the Iranian sanctions issue is taken.
OPEC and 10 non-cartel producers – led by Russia – have agreed for the first time at the end of 2016 to limit production to about 1.8 million barrels per day from January 2017 , in order to limit the overabundance of the offer since the end of 2014.
However, as a result of larger reductions in countries such as Saudi Arabia and production interruptions in other OPEC member countries, including Iran and Venezuela, compliance with the agreement has exceeded planned quotas. OPEC and its partners agreed in late June to bring compliance back to 100%, a goal they reiterated on Sunday. Compliance with the agreement was 129% in August, according to OPEC.
"The producer alliance has, over the last few months and year, reduced production, intentionally and accidentally, much more than was agreed in December 2016," said Tamas Varga, an analyst at PVM Oil Associates. Ltd. On Sunday, they decided not to comply with the request / instruction / request of the US president to lower prices, "he added.
Last week, Trump reiterated pressure on OPEC to manage price hikes, tweeting: "OPEC monopoly must drive down prices!"
Among the refined products on Tuesday, the reformulated Nymex gasoline blend – the benchmark gasoline contract – rose 2% to $ 2.04 a gallon. ICE diesel, a benchmark for diesel fuel, changed hands at $ 711.25 per tonne, up 1.35% from the previous one.
Write to Christopher Alessi at [email protected]
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