Oil prices climbed Thursday, maintaining four-year highs, after the U.S. indicated it wouldn’t open up its strategic petroleum reserves to flood the market and put a cap on prices.
Brent crude, the global benchmark, was up 0.7% at $81.89 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading 1.1% higher at $72.36 a barrel.
“Oil is trading higher this morning after U.S. Energy Secretary Rick Perry said that there are no plans for the U.S. to release oil from its Strategic Petroleum Reserves,” according to Warren Patterson, commodities strategist at ING Bank.
“There had been a growing view in the market that the U.S. would take such action in order to counter the impact from sanctions on Iran, particularly after OPEC+ members ignored President Trump’s request to increase production,” Mr. Patterson said.
U.S. Energy Secretary Rick Perry speaks during joint press conference on Sept. 18 in Bucharest, Romania. Photo: daniel mihailescu/Agence France-Presse/Getty Images
The Organization of the Petroleum Exporting Countries and its production allies, including Russia, agreed at a meeting in Algiers on Sunday to adhere to current production quotas first implemented at the start of 2017. That means continuing a gradual ramp-up in production the producers had agreed to at the start of the summer in an effort to bring down overcompliance with the initial agreement.
But the producers declined to announce specific plans to raise production further, seemingly defying calls by Mr. Trump for the cartel to increase output in order to put a cap on prices—sending prices soaring on Monday comfortably above the symbolic $80-a-barrel threshold.
Prices have been boosted in recent weeks due to falling Iranian crude exports in the run-up to U.S. sanctions on the Islamic Republic’s oil industry, set to take effect on Nov. 4.
Oil-market participants had been looking to see whether OPEC and its allies would move to further boost production to fill the gap left by falling Iranian supply. But the “unwillingness” of OPEC and its partners to declare their intention to ramp up production in their effort to replace Iranian barrels all of a sudden produced a very tight supply-demand balance for the fourth quarter of this year,” said Tamas Varga, analyst at brokerage PVM Oil Associates.
“As a result, the talk is now Brent reaching $100 a barrel in the not-so-distant future,” he said.
Among refined products Thursday, Nymex reformulated gasoline blendstock—the benchmark gasoline contract—was down 0.4% at $2.96 a gallon. ICE gasoil, a benchmark for diesel fuel, changed hands at $714.50 a metric ton, up 0.5% from the previous settlement.
Write to Christopher Alessi at [email protected]