Oil prices at four-year high after OPEC rebuffs Trump
Iran's oil minister said on Monday that an OPEC meeting rejected the demands of US President Donald Trump, saying that the "US dream" to cut Iranian oil exports to zero would not happen.
"The US seeks to reduce Iranian oil exports to zero… but that dream would not come to reality," Bijan Namdar Zanganeh said.
Zanganeh said such a plan isn't possible long-term, though Washington seems determined to cut Iran's crude exports, "even if for just a month."
However, he did say that Seoul hasn't bought any Iranian crude "for three continuous months."
Zanganeh welcomed the outcome of the Sunday meeting between OPEC members and the organization’s allies, which ended without any decision to further increase oil output despite Trump's call for lower prices.
Zanganeh said "no country gave a positive answer to Trump" and that this can be considered a "heavy defeat" for the US president.
Trump pulled the US out of the nuclear deal between Iran and world powers in May. Washington wants to reduce Iran's oil exports effectively to zero with renewed sanctions in November and has been pushing its allies to cut their oil imports from Iran.
It's unclear, however, how much other countries will cut back on Iranian oil imports. Britain, France, Germany, Russia and China, which also signed the nuclear deal, opposed the Trump administration's decision to withdraw from it. European countries are trying to salvage the landmark accord.
Oil at record high
Oil prices jumped more than two percent to a four-year high on Monday after OPEC ruled out any immediate increase in production despite calls by Trump for action to raise global supply.
Benchmark Brent crude hit its highest since November 2014 at $80.94 per barrel, up $2.14 or 2.7 percent, before easing to around $80.75. US light crude was $1.25 higher at $72.03.
"This is the oil market's response to the OPEC+ group's refusal to step up its oil production," said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.
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.
"I do not influence prices," Saudi Energy Minister Khalid al-Falih told reporters as OPEC and non-OPEC energy ministers gathered in Algiers for a meeting that ended with no formal recommendation for any additional supply boost.
Trump said last week that OPEC must get prices down now.
"It is now increasingly evident, that in the face of producers reluctant to raise output, the market will be confronted with supply gaps in the next three-six months that it will need to resolve through higher oil prices," BNP Paribas oil strategist Harry Tchilinguirian told Reuters Global Oil Forum.
Commodity traders Trafigura and Mercuria said on Monday that Brent could rise to $90 per barrel by Christmas and pass $100 in early 2019, as markets tighten once US sanctions against Iran are fully implemented from November.
1.5m barrels at risk
JPMorgan said US sanctions on Iran could lead to a loss of 1.5 million barrels per day, while Mercuria warned that as much as two million bpd could be knocked out of the market.
The Organization of the Petroleum Exporting Countries as well as top producer Russia has been discussing raising output to counter falling supply from Iran, although no decision has been made public yet.
A source familiar with OPEC discussions said on Friday that OPEC and other producers have been discussing the possibility of raising output by 500,000 bpd.
"We expect that those OPEC countries with available spare capacity, led by Saudi Arabia, will increase output but not completely offset the drop in Iranian barrels," said Edward Bell, commodity analyst at Emirates NBD bank.
Reuters and AP contributed to this story.