On Monday, Brent crude surged above $83 per barrel as Iran continues losing its crude exports ahead of USA sanctions which come into force in November.
US West Texas Intermediate (WTI) crude futures CLc1 marked $75.90 a barrel around 0630 GMT on Tuesday, their strongest since November 2014. Most of the bets on rising prices are overwhelmingly concentrated on Brent Crude, rather than on WTI or gasoline or other oil products.
Brent for December settlement increased as much as 54 cents to $83.27 a barrel on the ICE Futures Europe exchange and was at $83.17 at 12:22 p.m.in Singapore. In line with Reuters' survey, Bloomberg also reported that the OPEC production was expected to rise by only 30,000 barrels per day in September as the majority of the increase was offset by a 140,000 bpd fall in Iran's production.
"The market's very keen to figure out the size of impact from the Iranian supply disruptions and whether Saudi Arabia and Russian Federation are able to make up for the losses", Kim Kwangrae, a commodities analyst at Samsung Futures Inc., said by phone. Some market players are predicting the new US-Canada-Mexico free-trade deal will spur more demand.
Donald Trump spoke on the phone Saturday with King Salman bin Abdulaziz of Saudi Arabia, days after the USA president's latest criticism of OPEC over high oil prices. Oil analysts estimate that exports from Iran can be thinner by 1.5 million barrels per day when the new set of USA sanctions start.
Champions League: Man Utd train ahead of Valencia clash
Watch Manchester United v Valencia live on RTÉ2 from 7pm on Tuesday and follow our live blog on RTE Sport Online and the News Now App.
The US is rapidly increasing its production.
Brent was pushed up by the looming sanctions against Iran, which will start targeting its oil sector from November 4.
"We forecast well over 1 million bpd in global surpluses next year. even that may be too small, as emerging market currency collapses may harken a big emerging market growth slowdown next year", said Rapidan Group president Bob McNally. "However, such optimistic claims are falling on deaf ears", PVM Oil Associates strategist Stephen Brennock said. Most of the bullish trend came in response to the fact that the U.S. is ready to put sanctions on Iran and soon the supplies will drop in the market.
However, China's Sinopec is halving loadings of crude oil from Iran this month, in a sign that pressure from Washington is having an effect.
Britain's Barclays bank, however, said "OPEC has ample spare capacity". An oil analyst has said crude prices will touch $100 per barrel as producers have no means to stop such a spiral - something not seen since 2014.