Global oil prices surged to the highest levels in nearly four years Monday after OPEC members rejected President Donald Trump's call to boost output, saying markets remain "balanced" ahead U.S. sanctions on the sale of Iranian crude.
OPEC members, alongside key allies such as Russia, met in Algeria this weekend to discuss the market implication of Trump-led sanctions on Iran, which come into effect in November and could take between 1.5 million and 2.0 million barrels of crude from the market each day. However, despite a 10% rise in global prices over the past month, the cartel made no changes to its current production pace and said faster non-member production would offset only a modest rise in demand next year, keeping global markets "balanced".
"The markets are adequately supplied," said Saudi Arabia's powerful energy minister Khalid al-Falih. "I don't know of any refiner in the world who is looking for oil and is not able to get it. Given the numbers (from an OPEC produced report) we saw today (a production increase) is highly unlikely unless we have surprises on the supply and demand."
Brent crude contracts for November delivery, the global benchmark for pricing, surged $1.94 from their Friday close in New York to change hands at $80.74 per barrel in early European trading, the highest level since November 2014. WTI contracts for the same month, which are more tightly linked to U.S. gasoline prices, were seen $1.47 per barrel higher at $72.25.
The move is likely to draw the ire of President Trump, who Tweeted last week that "the OPEC monopoly must get prices down now!", particularly if U.S. gas price rise notably into the mid-term elections, which coincide with the start of U.S.-led sanctions on Iran.
Iranian oil minister, Bijan Zanganeh, said the tweet "was the biggest insult to Washington's allies in the Middle East".
OPEC's mid-term World Oil Outlook report, released during the cartel's Sunday meeting, said non-member supply would rise by 2.4 million barrels per day next year, compared to an increased in global demand of around 1.5 million, which it said would be dented by an economic slowdown triggered by trade disputes between the U.S. and its major partners.
"Declining demand for OPEC crude is a result of strong non-OPEC supply in the 2017-2023 period, most notably from U.S. tight oil," the cartel said. "The U.S. remains by far the most important source of medium-term supply growth, contributing two-thirds of new supply, driven by surging tight oil output."
Last week, the U.S.-based Energy Information Administration said domestic oil production neared its 11 million barrels of oil per day production peak as crude stocks slipped to the lowest levels -- 394.1 million -- since February 2015.