Oil prices fell but hovered near their highest level since November 2014 on Tuesday, with Brent crude not far off from its four-year highs booked the previous day as markets anticipate tighter supply once U.S. sanctions against Iranian oil exports take effect next month.
US oil prices hit their highest level since November 2014 on Tuesday and Brent crude was also near a four-year.
Gasoline pump prices are on the rise in the U.S. The national average gas price was $2.875 per gallon on Friday, according to AAA, up 1.4 percent in the past month and 11.7 percent higher than a year ago.
The recent increase in oil prices has raised hopes that crude could reach $100 per barrel for the first time since prices slumped in mid-2014, when Brent peaked at $115 per barrel.
The US President Donald Trump reviewed on Saturday in a phone call with Saudi King Salman bin Abdulaziz Al Saud the oil supply for stability of the market, Saudi Press Agency reported.
The sanction comes into effect on November 4, 2018, and it is created to cut crude exports from the third-biggest producer in the Organization of the Petroleum Exporting Countries (OPEC).
"We're going to find out very soon as approximately 1.5 million barrels (per day) of Iranian oil is effectively going offline on November 4".More news: Wireless phone users can't block Trump administration 'Presidential Alert' test message
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Saudi Arabia is expected to add oil to the market to offset the drop in Iranian production.
Trump's been increasing the pressure on OPEC, saying it's pushing oil prices too high.
While the ability of other nations to offset crude losses from Iran as a result of the November wave of USA sanctions remains a hot point of analytical debate, there's little question that exports from the Islamic republic have already dramatically decreased - to their lowest level in over 2 years, according to tanker tracking data compiled by Bloomberg.
"Until sizable supply is offered up by OPEC, ultimately traders will continue to push the envelope even more", said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
"The loss of Iranian oil sales, combined with declining Venezuelan production and skepticism that OPEC and non OPEC producers will be able to make up the difference has caused oil prices to rise with Brent now at $82 per barrel", Lipow said.
Soaring crude prices and weak emerging market currencies may erode economic growth.