Oil prices in NY highest in almost 4 years

Markets are edgy that an embargo on Iranian crude exports will be harsher than before and wreak havoc on markets. ─ Reuters  File

Washington's sanctions are set to start on November 4, and analysts say there may not be enough spare production capacity in the short-term to meet demand, potentially requiring large storage drawdowns.

An oil analyst has said crude prices will touch $100 per barrel as producers have no means to stop such a spiral - something not seen since 2014.

Oil futures jumped more than US$2 (RM8.30) a barrel Monday, rising to levels not seen since November 2014, as USA sanctions on Iran loom and a North American trade deal fosters growth.

The average cost of gasoline in the USA has risen 60 percent from $1.87 per gallon in February 2016 to nearly $3 in September.

In line with Reuters' survey, Bloomberg also reported that the OPEC production was expected to rise by only 30,000 barrels per day in September as the majority of the increase was offset by a 140,000 bpd fall in Iran's production.

Still, oil prices drew support from worries that Iranian production will drop sharply after US sanctions go into effect on November 4. Top traders forecast crude above $100, while speculation that backup supplies are scarce is keeping investors nervous before American sanctions on the Persian Gulf state due next month.

Meanwhile, the 24-year-old North American Free Trade Agreement will now be superseded by the U.S. -Mexico-Canada Agreement, covering a region that trades more than $1 trillion annually.

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With just over a month until the re-imposition of sanctions on Iran's energy sector, oil prices are trading at the highest level in over 4yrs with the price of Brent breaking above $85/bbl.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were off 7 cents at $75.23 a barrel, after earlier touching a four-year high of $75.91.

Brent LCOc1 fell 18 cents to settle at $84.80 per barrel, a day after hitting a four-year high of $85.45.

"In the short term, it's very clear that the risks to oil are to the upside", said Wayne Gordon, Singapore-based executive director for commodities and foreign exchange at UBS Group AG's wealth management unit.

Brent and WTI have roughly tripled compared with lows seen in January 2016, when oil cartel Opec and allies led by Russian Federation started to curb oil supplies to rebalance an oversupplied market.

U.S. President Donald Trump called Saudi Arabia's King Salman on Saturday, discussing ways to maintain sufficient supply once Iran's exports are hit by sanctions.

Trump has been increasing pressure on OPEC, saying it's pushing oil prices too high.

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