Oil briefly hit $80 for the first time since 2014

Oil briefly hit $80 for the first time since 2014

Goldman Sachs, though, said even with a slowdown in demand and soaring US output, global oil markets would remain tight.

The agency added that developing nations that phased out fuel subsidies when prices were lower are especially sensitive to the high prices; it also noted that the "effect of higher prices should in particular become apparent in gasoline demand in the next few months".

"The potential double supply shortfall represented by Iran and Venezuela could present a major challenge for producers to fend off sharp price rises and fill the gap, not just in terms of the number of barrels but also in terms of oil quality", the Paris-based organization said.

US bank Morgan Stanley said it had raised its Brent price forecast to $90 per barrel by 2020 due to a steady increase in demand. That data point is worth emphasizing: OPEC has claimed for more than a year that it was trying to erase the inventory surplus, and at least according to IEA data, that mission has now been accomplished.

The Secretary-General, Organisation of the Petroleum Exporting Countries (OPEC), Mohammed Barkindo, attributed the rising oil prices to efforts by OPEC and non-OPEC countries to rebalance the market through production freeze.

Concerns over the impact of USA re-sanctioning on Iran apart from other factors like economic crisis in Venezuela are keeping the oil prices high.

Stronger oil prices are also spilling into other markets. The country is the Iran's second-biggest buyer of crude after China. Past year during the summer, US crude stocks dropped by 52 million barrels, but from a much higher base of above 500 million barrels. Strong non-OPEC growth, led by the USA, pushed global supplies up 1.78 mb/d on a year ago.

The coming US sanctions pushed up oil prices last week after President Donald Trump withdrew the United States from the nuclear deal.

Economic crisis has driven Venezuelan production to its lowest in years, while natural decline in Mexico cut production by 175,000 bpd in April, down 8 per cent year-on-year, the largest fall for any non-Opec producer.

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Conoco's actions, combined with a crackdown by the U.S. Treasury, could send Venezuela's oil production deeper into a death spiral. Current conditions-with geopolitical unrest, unplanned supply outages, thin spare capacity, and rising demand-mirror the state of affairs in 2008 and 2011, when prices rallied into triple-digit territory. Oil stocks were expected to drop further as peak summer driving season nears, offsetting increases in USA shale output, said analysts at Bernstein.

This was to spur U.S. domestic oil production, particularly shale resources, and anything else that can "wean" the United States from foreign oil imports.

Even at $80 per barrel, the costs of oil are huge, with Asia's consumption costing $1 trillion a year, twice as much as during the price lull of 2015/2016.

Saudi Arabia has acknowledged the need to work with producers and consumers to mitigate possible supply shortfalls, which could be offset by higher expected growth in USA oil output of 120,000 bpd this year.