Oil prices have hit a four-year high of over $81 a barrel after Organization of the Petroleum Exporting Countries rejected calls by U.S. President Donald Trump to increase crude oil production.
Global benchmark Brent crude rose as high as $81.39 a barrel, its strongest level since Nov. 21, 2014. This price rise came on the back of a tightening oil market and OPEC leaders signaling they won't be immediately boosting output.
U.S. ally Saudi Arabia leads the OPEC oil cartel, while Russia is the biggest oil producer outside the group. These countries met in Algiers on Sunday to discuss global supply levels and the impact of U.S. sanctions on Iran which is likely to affect crude supply. Sales of Iranian crude have fallen as buyers remain wary of penalties from U.S. sanctions due to take effect from November 4 this year.
The Algiers meeting ended with no formal agreement on any additional supply boost. The ministers said they would increase output only in the event that customers wanted more cargoes.
Trump said last week that OPEC "must get prices down now!", but Iranian Oil Minister Bijan Zanganeh said on September 24 OPEC’s decision did not take into consideration Trump's demands but the countries' needs as well as global oil economy.
A group of about a dozen oil producers led by OPEC has aimed to keep 1.8 million barrels a day off the market since January 2017 in order to drain a global glut of oil that caused a punishing downturn of crude prices.
J.P. Morgan wrote in its latest market outlook that "a spike to $90 per barrel is likely" in the coming months thanks to U.S. sanctions on Iranian oil exports, which have fallen dramatically in recent months as importers brace for the impending penalties. The bank forecasts Brent and U.S. benchmark WTI prices to average $85 and $76 per barrel, respectively, in the next six months.
News of the impending rise in crude oil prices will impact oil-importing countries like India. The country is already facing historically high fuel prices with petrol at Rs. 90/ litre in Mumbai.