Oil Extends Rally as Trump Reiterates Commitment to Iran Sanctions
Crude oil prices shot to a four-year high on Tuesday, catapulted by imminent U.S. sanctions on Iranian crude exports and the apparent reluctance of OPEC and Russia to raise output to offset the potential hit to 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.
The oil price is on course for its fifth consecutive quarterly increase, the longest stretch of gains since early 2007, when a six-quarter run led to a record high of $147.50 a barrel.
U.S. crude futures were up 37 cents at $72.45 a barrel, close to their highest since mid-July.
The United States will target Iran's oil exports with sanctions from Nov. 4, with Washington applying pressure on governments and companies around the world to fall into line and cut their purchases.
U.S. President Donald Trump reiterated his commitment to sanctions, saying on Tuesday that he would not meet with the Iranians until the country makes changes.
Speaking before he was due to address the U.N. General Assembly, Trump said: "I'm not meeting with them until they change their tune. It will happen. I believe they have no choice. We look forward to having a great relationship with Iran, but it won't happen now."
The sanctions are expected to have an immediate impact on the country's crud exports.
"Iran will lose sizeable export volumes, and given OPEC+ reluctance to raise output, the market is ill-equipped to fill the supply gap," Harry Tchilinguirian, global head of commodity markets strategy at French bank BNP Paribas, told the Reuters Global Oil Forum.
Mohammad Barkindo, secretary general of the Organization of the Petroleum Exporting Countries (OPEC), said in Madrid that it is important for OPEC and its partners, including Russia, to cooperate to ensure they do not "fall from one crisis to another".
The International Energy Agency forecast strong oil demand growth of 1.4 million barrels per day (bpd) this year and 1.5 million bpd in 2019, and said in its most recent report that the market was tightening.
The so-called "OPEC+" group, which includes the likes of Russia, Oman and Kazakhstan, met at the weekend to discuss a possible increase in crude output, but the upshot of the gathering was that the group was in no rush to do so.
"After the weekend’s meeting, the voices of those who foresee $100 a barrel and compare the current backdrop to the 2007/2008 bull run are getting louder," said PVM Oil Associates strategist Tamas Varga.
"Undoubtedly the oil market is expected to be tight in coming months and, if OPEC’s own numbers are to be believed, global oil inventories are to fall during the remainder of the year."
Reporting by Jessica Resnick-Ault, Henning Gloystein and Amanda Cooper