Oil traders say $100 coming as Opec struggles to fill supply gap


Major oil trading houses are predicting the return of $100 crude for the first time since 2014 as Organisation of Petroleum Exporting Countries (Opec) and its allies struggle to compensate for US sanctions on Iran’s exports.
With Brent crude already jumping to an almost four-year high on Monday, that’s exactly the kind of price surge President Donald Trump has been seeking to prevent by pressuring the Opec to raise production. Yet the cartel and its allies gave mixed signals at a meeting in Algiers on Sunday, ultimately showing little sign they would heed US demands to rapidly push down crude prices.
Opec’s reticence, combined with signs of accelerating supply losses from Iran, created a bullish mood the annual gathering of the Asian oil industry, traders, refiners and bankers in Singapore on Monday.
“The market does not have the supply response for a potential disappearance of 2 million barrels a day in the fourth quarter,” Mercuria Energy Group Ltd. co-founder Daniel Jaeggi said in a speech at the S&P Global Platts Asia Pacific Petroleum Conference, knows as APPEC. “In my view, that makes it conceivable to see a price spike north of $100 a barrel.”
When Trump in May announced plans to reimpose sanctions on Iran’s oil exports, the market estimated a cut of about 300,000 to 700,000 barrels a day, said Trafigura Group co-head of oil trading Ben Luckock. However, the consensus has now moved to as much as 1.5 million barrels daily as the US is “incredibly serious” about its measures, he said.
Iran’s production ‘is going to be significantly less than it was, and probably lower than most people expected when sanctions were announced,’ Luckock said. He sees $90 oil by Christmas and $100 in early 2019.

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