While in New York on Tuesday, French President Emmanuel Macron said that if US President Donald Trump had not reimposed sanctions on Iranian crude, oil prices would not have climbed so high. Elysee Verified Twitter photo.

Brent oil prices top $81/barrel on Tuesday

On Tuesday, French President Emmanuel Macron responded to recent criticisms from US President Donald Trump concerning rising oil prices.  Macron said that had Trump not reimposed sanctions on Iranian crude exports, oil prices would not have climbed so high.

“If he goes to the end of his logic, he’ll see that it’s good for the oil price that Iran can sell it,” Macron said. “It’s good for peace and global oil prices. Otherwise there is an impasse in the rationale for which I don’t have the answer. It’s an economic reality … supply and demand.”

By 3:07 p.m., EDT, benchmark Brent crude prices were up 77 cents to $81.30/barrel and US West Texas Intermediate rose 25 cents to $72.33/barrel.  The Canadian Crude Index climbed 80 cents to $39.79.

Brent crude is set for its fifth consecutive quarterly increase, which is the longest stretch of gains since early 2007.  At that time, a six-quarter run led to record-high oil prices of $147.50/barrel.

In a speech at the United Nations, President Trump called on OPEC to increase its production and stop raising prices.  Trump’s comments came after Sunday’s meeting of OPEC and its supply cut agreement allies.  The group, known as “OPEC+” agreed they would not increase their output beyond the amounts agreed to in the 2017 pact.

According to Reuters, Mohammad Barkindo, OPEC secretary general, said while in Madrid on Tuesday that OPEC and its partners must continue to cooperate to ensure they do not “fall from one crisis to another”.

“It’s hard to believe that the Saudis won’t answer the call at some point, especially if prices tick much higher,” John Kilduff, a partner at Again Capital told Reuters. “He’s (Trump) going to be unrelenting in pressuring them.”

Prior to Trump’s UN address, Brent prices had hit $82.55/barrel, the highest since Nov. 10, 2014.  Prices have risen due to market concerns that the Trump administrations decision to put sanctions on Iranian crude exports will result in global supply shortages.

The Iranian sanctions go into effect on November 4, but many customers have already begun purchasing crude from other sources.

President Trump said during his speech that the US will put more sanctions on Tehran after the oil sanctions in November.

According to Reuters, the crude export sanctions are expected to have an immediate impact on Iran and the global oil market.

“Iran will lose sizeable export volumes, and given OPEC+ reluctance to raise output, the market is ill-equipped to fill the supply gap,” Harry Tchilinguirian, global head of commodity markets strategy at French bank BNP Paribas, told Reuters.

Kilduff says most of the potential supply shortfalls have already been priced into the contract.

The International Energy Agency forecasts oil demand growth to hit 1.4 million barrels per day in 2018 and 1.5 million b/d in 2019, adding that the market is tightening.

Analysts polled ahead of US crude stockpiles data release on Tuesday and Wednesday anticipate oil inventories to drop for the sixth straight week.  The American Petroleum Institute will release its data on Tuesday afternoon, while the US Energy Information Administration will offer its data on Wednesday.