Will Brent Crude Oil reach $100/b?

Crude oil prices touched new four-year highs a day before. Brent crude - the international benchmark for crude oil - touched $82.20 a barrel during yesterday’s session. That marked a level beyond the last peak witnessed in November 2014. Expectation of a tightening supply in the global oil market in the coming months has pushed crude oil prices higher. The latest bout of weakness in crude oil prices comes ahead of start of sanctions by the United States on Iran, the third-largest producer among OPEC (Organization of the Petroleum Exporting Countries) member countries. India gets over 82 per cent of its crude oil supplies via imports. The onslaught of rising oil prices and a depreciating rupee is likely to widen India's current account deficit (CAD) and fiscal deficit.

Massive Increase in Brent Oil; the week in energy

• Brent crude breached $81 a barrel its highest level in nearly four years on the back of a tightening oil market and OPEC leaders signaling they won’t be immediately boosting output.
• Global benchmark Brent crude rose as high as $81.48 a barrel, its strongest level since Nov. 21, 2014. The contract ended Monday’s session up $2.50 a barrel, or 3.2 percent, at $81.20, its best closing prices since Nov. 11, 2014, when it settled at $81.67.
• Brent oil soared on Sept. 24 close to $81, reaching the highest level since November 2014 after OPEC and other global producers snubbed pressure from U.S. President Donald Trump to dampen prices.
• Sept. 23 meeting in Algiers brought together OPEC oil ministers and non-OPEC signatories to the 2016 agreement, as they seek to extend their cooperation.
• Iran’s oil exports averaged 2.1 million barrels per day (bpd) over the last year, and analysts say sanctions will likely take between 500,000 and 1 million bpd off the market.
• Aviation stocks came under pressure a day before yesterday after Brent crude oil prices crossed the $80 per barrel mark in international trade. A higher crude oil price exposes airline companies to the possibility that they would have to pay more for the same amount of fuel to run their operations.
  

  Facts to know about rising crude oil prices:

• The sanctions imposed by the US on Iranian crude exports will come into effect from November 4, 2018. Saudi Arabia and Russia have ruled out immediate production increases, after the United States' call for increase in supplies by the top producers.
• The US administration has demanded that the OPEC or Organization of the Petroleum Exporting Countries and Russia increase their supplies to make up for the expected fall in Iranian exports.
• Analysts expect crude oil prices to stay under pressure on the back of a deadlock on supply between the top producers and the world's largest economy. 
• Release of US crude data will be watched closely by oil investors going forward. "Given the current oil market scenario, we believe prices of crude oil are to rise around $78/bbl -$80/bbl unless the number of rigs deployed by the by the United States are increased," said credit ratings agency CARE Ratings.
• After the sanctions on Iran exports come into effect, oil prices "are likely to go even higher given an expected drop in supply from major producers Iran and Venezuela and political and price escalation prevailing in the markets".
• OPEC has 15 member countries including Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, the UAE and Nigeria. At the start of 2017, OPEC members and Russia, a non-OPEC supplier, together agreed to curtail output in an oversupplied market. 
• OPEC has, in its World Oil Outlook 2018, said that the demand for OPEC crude is projected to increase to around 40 million barrels per day in 2040, up from million barrels per day in 2018. The share of OPEC crude in the global oil supply is estimated to increase from 34 per cent in 2017 to 36 per cent in 2040.

Crude prices could rise above $100/b as market uncertainties stack up including sanctions on Iran, Venezuelan production concerns, tighter crude inventories and Saudi spare capacity, oil traders said at the S&P Global Platt’s Asia Pacific Petroleum Conference in Singapore. The US sanctions on Iran threaten to cut Iran's crude exports to as little as 1 million-1.3 million b/d from over 2.5 million b/d.