Brent crude was trading around its highest in nearly four years on Wednesday, on the back of a tightening oil market. The U.S. will apply sanctions to halt oil exports from Iran, the third-largest producer in the Organisation of the Petroleum Exporting Countries (OPEC), starting on Nov. 4 while a meeting of OPEC and non-OPEC oil ministers in Algiers over the weekend concluded with the 15-nation cartel and its allies refraining from an urgent boost in output.
Saudi Arabian Energy Minister Khalid al-Falih told reporters that Saudi Arabia had spare capacity to raise output but such a move was not required at the moment.
“The markets are adequately supplied. I don’t know of any refiner in the world who is looking for oil and is not able to get it,” Falih said, adding that Saudi Arabia could raise output by up to 1.5 million barrels per day (bpd) if needed.
The Trump administration has put repeated pressure on OPEC to bring prices down, but Iranian oil minister Bijan Zanganeh said on Monday the oil cartel had not responded positively to Trump’s demands.
Washington is also applying pressure on governments and companies around the world to fall into line and cut their purchases from Tehran.
Brent crude futures were down 49 cents at $81.38 a barrel by 1433 GMT, after gaining nearly 1 percent the previous session. Brent rose on Tuesday to its highest since November 2014 at $82.55 per barrel according to Reuters. U.S. crude futures were down 49 cents at $71.79 a barrel. They climbed on Tuesday to close at their highest level since July 11, the news agency said.
BNP expects crude around $82-85 a barrel in Q1 2019 on supply side disruption but does not expect it around $90 a barrel.
The OPEC has, in its World Oil Outlook 2018, said that the demand for OPEC crude is projected to increase to around 40 million barrels per day in 2040, up from million barrels per day in 2018. The share of OPEC crude in the global oil supply is estimated to increase from 34 per cent in 2017 to 36 per cent in 2040.