Oil prices hit a four-year high of $82.01 a barrel on Tuesday after Saudi Arabia and Russia appeared to reject calls from the US to increase production amid looming sanctions against Iranian oil.
Brent crude hit its highest level since November 2014 just days after a meeting in the Algerian capital to discuss global supply levels ended with no formal agreement.
US President Donald Trump slammed the Organization of the Petroleum Exporting Countries (OPEC) last week, saying the 15-member oil cartel should keep crude prices low because of the military protection the US provided for the region.
“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!” Trump wrote on Twitter.
We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!
— Donald J. Trump (@realDonaldTrump) September 20, 2018
OPEC leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia, effectively rebuffed Trump’s demand to lower prices on Sunday and failed to provide answers on how they would counter falling supplies from Iran.
“I do not influence prices,” Saudi Energy Minister Khalid al-Falih said.
US Secretary of State Mike Pompeo has said Washington may grant waivers for major importers of Iranian crude but it still expects them to ultimately comply with the sanctions.
“We will consider waivers where appropriate but it is our expectation that the purchases of Iranian crude oil will go to zero from every country or sanctions will be imposed,” Pompeo said earlier this month.
But speaking to NBC News on Monday, Iranian President Hassan Rouhani said the US didn’t have the capability to bring the Islamic Republic’s oil exports down to zero.
“The US is not capable of bringing our oil exports to zero. This is an empty promise and it’s a threat that is empty of credibility. Perhaps on this path we will sustain certain pressures but certainly the United States will not reach its objective.”
According to the Wall Street Journal, Saudi Arabia, the world’s top oil exporter has increased production to about 10.4 million barrels of crude per-day over the past two months.
But according to the newspaper, the kingdom’s state-run oil giant Saudi Arabian Oil Co, known as Aramco, doesn’t have the capacity to meet future demand if Iran is no longer delivering oil.
Citing oil traders, it said with the combination of sanctions on Iranian oil and supply limitations in Saudi Arabia, there could be a “price spike, likely $90 to $100” a barrel.
Commodity traders Trafigura and Mercuria have also warned that Brent crude prices could rise to $90 a barrel by December and pass $100 in early 2019.