Oil prices surge 2 percent to four-year high after OPEC rebuffs Trump

Oil prices jumped more than 2 percent to a four-year high on Monday after Saudi Arabia and Russia ruled out any immediate increase in production despite calls by U.S. President Donald Trump for action to raise global supply. The Organization of the Petroleum Exporting Countries and non-OPEC states, including top producer Russia, gathered in Algiers on Sunday for a meeting that ended with no formal recommendation for any additional supply boost to counter falling supply from Iran.

Brent crude LCOc1 hit its highest since November 2014 at $80.94 per barrel, up $2.14 or 2.7 percent, before easing to $80.62 by 11:05 a.m. EDT (1505 GMT). U.S. light crude CLc1 was $1.43, or 2 percent, higher at $72.21. Trump said last week that OPEC “must get prices down now!”, but Iranian Oil Minister Bijan Zanganeh said on Monday OPEC had not responded positively to Trump’s demands. “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 that Brent could rise to $90 per barrel by Christmas and pass $100 in early 2019, as markets tighten once U.S. sanctions against Iran are fully implemented from November. Absent signs that trade tensions have eroded Chinese demand, the market will continue to surge, Tradition’s McGillian said. “That is one of the reasons we have cruised toward $80,” he said. U.S. commercial crude oil inventories C-STK-T-EIA are at their lowest since early 2015 and although U.S. oil production C-OUT-T-EIA is near a record high of 11 million bpd, subdued U.S. drilling points toward a slowdown in output.