Oil prices hit a four-year high of $82.03 per barrel of Brent Crude after OPEC, the Organization of the Petroleum Exporting Countries, chose not to boost production as requested by US President Donald Trump.

Crude oil supplies are down after the United States implemented sanctions against Iran, one of the main OPEC nations, with further restrictions to be established in November. To avoid a price rise, President Trump called on other OPEC nations to increase their oil output to fill the market gap.

Crude oil was $50 per barrel towards the end of 2016, compared to prices between $70 and $80 this year. A cut in OPEC production, arranged by Russia, has steadily driven prices up. OPEC met on Sunday in Algiers with several non-OPEC nations (including Russia) to discuss increased output to lower prices but those present failed to reach an agreement.

President Trump took to Twitter in combative fashion, criticising the OPEC nations for squeezing the market and (ironically) suggesting they are ungrateful for the United States’ help in the past.

The price rise is the highest for crude oil since November 2014, with the price today currently at $81.87 according to Bloomberg, and there’s plenty of speculation that the price will continue to rise later in the day when the US markets open. Analysts and investors are forecasting continued oil price rises this year and next, with speculation that Brent Crude could spike in price to hit anywhere between $90 and $100 per barrel. The rise would be good for the oil industry, in terms of research and development, but bad for consumers.

Sarah Kent, Oil and Gas Reporter for the Wall Street Journal, tweeted this quote from the Bank of America Merrill Lynch:

Breaking the $90 mark will be the biggest psychological hurdle for Brent Crude, especially when Washington's special envoy for Iran, Brian Hook, came out and said that the United States has “a well-supplied oil market”. Goldman Sachs hold a similar position too, saying that despite a decline in production from Iran they expect other producers to up their production to meet demand, rather than letting prices climb much further, with Russia the most likely candidate to boost output.

The problem for Brent Crude prices, and the key driver in the short-term, is the amount of oil disappearing off the market because of the US sanctions on Iran. So far, the only OPEC nation that has increased output has been Libya, adding an extra 270,000 barrels per day, but Saudi Arabia’s output has declined by 140,000 barrels to negate over half of these gains.

Michael Hewson, chief market analyst at CMC Markets UK, told The Guardian: “Whatever the rights of wrongs of the decision to reimpose sanctions [on Iran] it has had the effect of removing 3 million barrels of output from the global oil supply. Given the cuts to capital expenditure as a result of the slide from $110 in 2014 to the lows of $27 a barrel in 2016, it was always going to be difficult to replace that capacity, at a time when inventories have been declining, and so it has been proved.”


The Future of Oil:

OPEC’s research data is predicting a strong future for Brent Crude despite the evolution of cleaner energy technology, with airlines the primary driver of demand over the next five years – demand that will offset the switch from petrol and diesel to electric cars. At present, 100 million barrels of oil are produced per day. By 2040, the OPEC report expects 112 million. The OPEC annual report pointed to increased future supply to be driven by the USA, China and India, as fracking becomes more prevalent in unlocking previously untouchable resources.