The global and U.S. benchmarks for the price of oil are up more than 20 percent in 2018, stoking talk that the price of oil could hit $100 a barrel for the first time since 2015, The Wall Street Journal reported.
Brent crude, the global benchmark, has risen for five straight quarters after hitting $82.72 at the end of 2018’s third quarter. West Texas Intermediate (WTI), the U.S. benchmark, slipped slightly — 1.2 percent — from a multiyear high to $73.25 last quarter. Brent has increased 24 percent and WTI has risen 21 percent in 2018. (RELATED: Gas Prices Are Still At Four-Year High Heading Into Midterm Elections)
Oil prices have been pushed upward by production cuts by the international oil cartel OPEC, U.S. sanctions on Iran that will fall on Nov. 4 and a troubled Venezuelan oil industry.
“When you have a geopolitical risk backdrop like this, it just fuels bullish market sentiment,” Barclays head of energy commodities research Michael Cohen told WSJ. “The fundamentals of the market are tightening before some had expected.”
Historic oil production in the U.S. has tempered the advance in international oil prices, but U.S. oil infrastructure — mainly pipelines — are straining to move all the oil the U.S. is producing to international markets. The bottleneck has shoved U.S. oil prices nearly $10 a barrel lower than international prices.
U.S. decision makers could curb the upward pressure Iranian sanctions are putting on the price of oil by granting exceptions to individual companies that allow them to keep doing business in Iran without cutting themselves off from U.S. markets and financing.
“I don’t see any barrier whatsoever for oil prices hitting $100 a barrel” if U.S.-Iran tensions escalate, Banyan Hill Publishing investment research analyst Matt Badiali told WSJ. “Going into the holiday travel season, that would be really frustrating for the American consumer.”
Analysts at the Bank of America predict the Brent crude benchmark could hit triple digits in the second quarter of 2019, with WTI trailing just slightly behind, CNN reported.
The last time WTI measured oil prices over $100 a barrel was August 2014.
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