Oil price jumps as Opec keeps output steady

Saudi energy minister rips Trump tweet: 'I do not influence oil prices'

Benchmark Brent crude hit its highest since November 2014 at $80.94 per barrel, up $2.14 or 2.7 percent, before easing back to around $80.65 by 1000 GMT.

Bank of America's main scenario is for oil prices next year of around US$80 a barrel, according to the note.

"I do not influence prices", Saudi Energy Minister Khalid al-Falih told reporters.

"My information is that the markets are adequately supplied".

"OPEC is struggling to battle through a ideal storm of strong demand and bigger-than-expected supply losses", said Daniel Hynes and Soni Kumari, Commodity Strategists at ANZ Bank last week.

Also Sunday, OPEC released its World Oil Outlook 2040 report. Japan, one of Iran's largest oil importers, was seeking a waiver that would allow it to continue buying Iranian oil.

Meanwhile, China's oil imports from Iran reportedly plunged by around 250,000 barrels per day (bpd) in August compared to a month earlier, though Beijing signaled its intent to keep buying.

Add to this the loss of Venezuelan oil because of mounting economic and political problems, and ongoing conflict-related disruptions in Libya, and suddenly the market doesn't look that well-supplied any more.

So far, the tough measures have reportedly forced Japanese refiners to stop buying Iranian crude.

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Commodity merchants Trafigura and Mercuria said that Brent could rise to $90 per barrel by Christmas and even above $100 in early 2019 as markets tighten once United States sanctions against Iran are implemented from November.

"It's going to be significantly less than it was, and probably lower than most people expected when the sanctions were announced - hence the higher prices", Luckock said at the APPEC event.

Backwardation is normally a sign of a tight market, as traders and consumers are prepared to pay more in order to assure supplies in the near term.

One problem is the uncertainty over how much oil will be lost when the US -led sanctions against Iran begin in November.

Looking at prices that more closely track Iranian crude, such as Oman futures on the Dubai Mercantile Exchange and physical Dubai swaps, and some interesting trends emerge.

Currently, Dubai swaps for November are at $75.95 a barrel, a premium of $2.07 to the April contract.

Such prices made oil companies like Exxon Mobil Corp. the world's most valuable firms and spurred investment in risky billion-dollar oil projects.

OPEC and its allies are scheduled to meet on Sunday in Algeria to discuss how to allocate supply increases to offset a shortage of Iran supplies due to USA sanctions.

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