Oil price rises as markets tighten ahead of Iran sanctions

Commodity merchants Trafigura and Mercuria said that Brent could rise to $90 per barrel by Christmas and even above $100 in early 2019 as markets tighten once USA sanctions against Iran are implemented from November.

The decision by Opec and its allies not to urgently increase output at their meeting in Algiers was in effect a snub to US President Donald Trump, who has been persistently calling for action to cool the market.

Saudi Energy Minister Khalid al-Falih said: "I do not influence prices".

In late July, Saudi officials said their country's state oil company is not ready to be publicly listed, casting doubts over whether much-lauded plans at the heart of Saudi Arabia's economic reforms will go ahead at all.

Trump, whose decision to leave an worldwide nuclear deal with Iran and reimpose sanctions on the country has pushed oil prices to levels not seen since 2014, on Thursday demanded that OPEC members lower the prices.

Tehran had previously said no OPEC member was allowed to grab market share from rivals, such as Venezuela or Libya, whose production had declined due to unrest or a lack of investment.

He said on Twitter "they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices".

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The price rally mainly stemmed from a decline in oil exports from OPEC member Iran due to fresh United States sanctions. Trump wrote on Sunday.

Saudi Arabia, OPEC's biggest producer, says it can add an extra 1.5 million barrels per day - about 1.5 percent of world demand - to the market.

In addition to US sanctions cutting Iranian supply, the world is also dealing with a decline in Venezuelan oil production due to an economic crisis in the Latin American nation, according to Trafigura's Luckock.

The next meeting of the conference - the full group of OPEC and non-OPEC ministers, is not until December.

"With demand remaining strong in the short term, we still see oil balances constructing higher oil prices".

Such a price rally would mark the first time since the summer of 2014 that oil would return to the $100-a-barrel level that became the norm in the early part of this decade. Early last week, the market was supported by a report which said Saudi Arabia would be comfortable with Brent prices over $80 a barrel. "We're looking at $68 [average] for this year and $73 for 2019".

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