OPEC raises forecast based on USA oil production

Crude prices are spiking

Crude prices are spiking

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading sharply higher on Monday, shortly before the cash market opening after OPEC held its ground over the weekend and declined to agree to an immediate increase in output despite last week's pressure by President Trump to do so.

OPEC leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia, on Sunday effectively rebuffed a demand from Trump for moves to cool the market. Bank of America Merrill Lynch joined JPMorgan Chase & Co.in anticipating higher prices down the line - the former expects crude to reach US$95 a barrel in the first half of next year.

OPEC members and leading non-OPEC producer, Russia, on Sunday ruled out any additional increase in crude output, dealing a blow to Trump's re-election ambitions.

"Our plan is to meet demand", said Saudi Energy Minister Khalid Al-Falih.

Major oil trading houses are predicting the return of $100 crude for the first time since 2014.

"The Trump administration is pushing politics into the OPEC (Organization of Petroleum Exporting Countries), and is aiming at spreading the members and securing their own interests by getting lower prices and so forth", Hossein Kazempour, Iran's OPEC representative, told CNBC on Sunday.

US light crude CLc1 was 1.25 dollars higher at 72.03 dollars.

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His demand came after benchmark Brent oil reached $80 a barrel this month, despite his earlier assurances that USA curbs on Iran's oil exports would not affect the market because Saudi Arabia would make up for the shortage.

The tightening US market came ahead of sanctions that Washington plans to implement against Iran's petroleum exports from early November.

Major oil trading houses are predicting the return of US$100 crude for the first time since 2014 as OPEC and its allies struggle to compensate for USA sanctions on Iran's exports.

Iran told OPEC its production had been steady in August at 3.8 million barrels per day. The biggest source of new global supply, USA shale, is also experiencing growing pains as pipeline bottlenecks and workforce issues may hamper growth, he said.

"OPEC did not guarantee that they would automatically replace lost Iranian barrels of oil due to sanctions", said Bob Yawger, director of the futures division at Mizuho Securities USA. "The reason Saudi Arabia did not increase more is because all of our customers are receiving all of the barrels they want".

One problem is the uncertainty over how much oil will be lost when the USA -led sanctions against Iran begin in November.

"We believe that Saturday's terrorist attack in Iran could prove to be the weekend's more consequential event as it will likely exacerbate the already unsafe Middle East antagonisms", Helima Croft, global head of commodity strategy at RBC Capital Markets, said Sunday.

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