With U.S. sanctions against Iran, the third-largest producer in OPEC, looming, U.S. investment bank J.P. Morgan said in its latest market outlook that "a spike to $90 per barrel is likely" for oil prices in the coming months.
OPEC's reticence, combined with signs of accelerating supply losses from Iran, created a bullish mood the annual gathering of the Asian oil industry, traders, refiners and bankers in Singapore on Monday. The last time prices were sustained at that level was 2014.
Brent crude hit its highest since November 2014 at $80.94 a barrel, up 2.7%, before falling back to $80.49. U.S. commercial crude oil inventories are at their lowest since early 2015 and although USA oil production is near a record high of 11 million barrels per day (bpd), subdued United States drilling activity points toward a slowdown in output.
Saudi Arabia, OPEC's biggest producer, says it can add an extra 1.5 million barrels per day - about 1.5 percent of world demand - to the market. "We will remember. The OPEC monopoly must get prices down now!" he tweeted. Output in Venezuela is also slumping due to an economic crisis.
Another is Iran, which has been the target of new U.S. sanctions targeting its oil industry since Trump made a decision to pull America out of the 2015 Iran nuclear deal.
Instead, the meeting agreed to stick to the previously agreed output, with Kuwait's Oil Minister Bakheet Rashidi saying the JMMC will fully conform with the Vienna deal, at least until the next meeting in November and December.
As always, quantifying that cost is hard, but the co-head of oil trading at Trafigura, Ben Luckock, on Monday told the Asia Pacific Petroleum Conference, hosted by S&P Global Platts, that a price of $90 a barrel by Christmas and $100 by New Year was possible. However, Saudi Arabia and Russian Federation now say they have no more capacity.
It could prompt Washington to consider extraordinary measures, including the use of the Strategic Petroleum Reserve, to cool down fuel prices ahead of the USA mid-term elections.
Those are the highest prices since December of 2014, just before oil began its slide that took it down to $40 USA a barrel in 2015, discouraging investment in the oil patch.
"OPEC is struggling to battle through a flawless storm of strong demand and bigger-than-expected supply losses", said Daniel Hynes and Soni Kumari, Commodity Strategists at ANZ Bank last week.
"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.
"Balances are precarious and the lack of spare capacity could see crude pricing well above US$90 or even US$100, should all of the potential risk in the market materialize", analysts including Ed Morse said in the note.