Crude Oil Gaps Higher After OPEC Cools Off Production Hikes

OPEC raises forecast based on US oil production

OPEC raises forecast based on US oil production

The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC states, including top producer Russian Federation, gathered in Algiers on September 23 for a meeting that ended with no formal recommendation for any additional supply boost to counter falling supply from Iran.

Mr Trump called on the Organisation of the Petroleum Exporting Countries (OPEC) to lower prices. Output should then fall to an average of 12.1 million barrels a day by 2040, according to OPEC.

Global benchmark Brent crude for November delivery was up at 79.40 dollars a barrel.

They have reportedly been discussing raising output by half a million barrels a day to counter falling supply from Iran. USA light crude was $1.35 higher at $72.13.

But Saudi Arabia's energy minister Khalid al-Falih left the way open to a future production hike, as supplies tighten due to the United States imposing sanctions on Iranian oil from November this year.

In August, OPEC and its allies cut production by 600,000 bpd more than their pact required, mainly as a result of falling output in Iran as customers in Europe and Asia reduced purchases ahead of the USA sanctions deadline.

Rather than OPEC controlling prices, analysts have instead blamed Trump's latest round of sanctions on OPEC-member Iran for driving up the price, as supply from Tehran decreased.

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Those fears have sent crude oil prices higher, with commodity traders Trafigura and Mercuria predicting prices could rise to more than $100 a barrel by early next year.

In response to Trump's remarks, Saudi Arabia's oil minister Khalid al Falih told CNBC: "That is of course not true, we have been looking at more important aspects which is adequacy of supply".

"As we produce more energy here at home, the USA needs markets for its products in order for our economy to continue to grow". Early last week, the market was supported by a report which said Saudi Arabia would be comfortable with Brent prices over $80 a barrel.

This deal was upheld at Sunday's meeting.

The OPEC oil cartel raised its global production forecast on Sunday based on higher-than-predicted U.S. output in a report outlining a long-term rise in net demand, particularly in developing countries. This time, the deepening trade war between the US and China threatens economic growth in Asia and turmoil in emerging countries could amplify the impact of higher prices on global demand growth.

"OPEC is struggling to battle through a flawless storm of strong demand and bigger-than-expected supply losses", said Daniel Hynes and Soni Kumari, Commodity Strategists at ANZ Bank last week.

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