Traders bet on oil at $100 as Iran sanctions loom

Brace yourselves Oil may soon skyrocket to $100 per barrel says analyst image

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Crude oil prices came off four-year highs on Thursday, dragged down by reports suggesting Russian Federation and Saudi Arabia have struck a private deal to raise crude output.

U.S. West Texas Intermediate (WTI) crude futures rose 1 cent to settle at $74.34 a barrel.

Worldwide benchmark Brent crude oil futures were at $85.03 per barrel up 5 cents from their last close, and not far off the $85.45-peak reached in the previous session, the highest since November 2014. Trump and King Salman last shared a reported telephone call on Saturday, in which they discussed "efforts to maintain supplies to ensure the stability of the oil market and ensure the growth of the global economy", according to the state-run Saudi Press Agency.

WTI's weekly gain was about 1.3 per cent; Brent's was around 1.4 per cent. In addition, United States shale has a much longer journey to India than crude oil from the Middle East.

The Trump administration's decision to pull out of a 2015 global agreement to curb Iran's nuclear program, and a reimposition of economic sanctions on the third-largest producer of crude set to kick in next month have helped to drive oil prices higher. The contract closed down 0.1 percent Tuesday after rising to the highest close since November 24, 2014 in the previous session. The contract dropped 0.2 percent to $84.80 a barrel on Tuesday.

According to Petronet, the oil price information system of Korea National Oil Corporation, Korea imported about 7.3 million barrels of US crude oil in August, much more than the two million barrels it imported from Iran in the same period. Currently, most OPEC producers are pumping at, or close to, full capacity, with only Saudi Arabia able to increase output significantly. Trump in July tweeted without evidence that Saudi Arabia would increase its production "maybe up to 2,000,000 barrels" a day.

"Iranian exports could fall below 1 million bpd in November", U.S. bank Jefferies said. The responses varied widely, with one analyst forecasting a 3.65 million-barrel gain, while some others predict a decrease of 2.5 million to 3 million barrels.

The Energy Information Administration reported Wednesday that domestic crude supplies surged by 8 million barrels for the week ended September 28.

The government also expected to sell 2.4 million barrels per day of oil during the current Iranian calendar year, which started in mid-March, but it exported 2.5 barrels in reality, he said.

-With assistance from Stephen Stapczynski.

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