Global benchmark Brent crude rose US$2.33 a barrel, or 3 percent, to US$81.13 by 11:45 a.m. ET (1545 GMT), having hit its strongest level since November 21, 2014. The contract has climbed from US$71 in the last five weeks.
Meanwhile, U.S. West Texas Intermediate crude was up US$1.80, or 2.5 percent, at US$72.55, its highest level since July.
Brent first hit a new four-year high in early morning trade. Oil prices extended gains at midday, increasing the odds of a breakout, according to some analysts.
“If we get a close over US$80 that’s going to be very bullish. From there then you could see a greater push higher, really to US$83 or US$85,” said John Kilduff, founding partner at energy hedge fund Again Capital. “That should engender follow-through buying.”
J.P. Morgan wrote in its latest market outlook that “a spike to US$90 per barrel is likely” in the coming months thanks to U.S. sanctions on Iranian oil exports, which have fallen dramatically in recent months as importers brace for the impending penalties.
The bank forecasts Brent and U.S. benchmark WTI prices to average US$85 and US$76 per barrel, respectively, in the next six months.
A meeting of OPEC and non-OPEC oil ministers in Algiers over the weekend concluded with the 15-nation cartel and its allies refraining from an urgent boost in output, despite President Donald Trump’s demands that it work harder to bring down prices.
The ministers said they would increase output only in the event that customers wanted more cargoes.
Monday’s fresh multiyear high for Brent was always on the cards, said Stephen Brennock, oil analyst at PVM Oil Associates in London.
“Price risks remain skewed to the upside in the run-up to looming U.S. sanctions on Iranian oil exports. This outlook has been cemented by inaction on the part of OPEC+ over the weekend, which has in effect green-lighted a forthcoming supply squeeze,” he said.
The analyst sees the current bout of upward buying pressures persisting through to the end of the year, but warned that the outlook for 2019 was a different story.
“The oil balance in the early part of 2019 makes very bad reading for oil bulls with a sizable supply surplus penciled in by the leading energy agencies,” he said. “This will inevitably take the steam out of the current upswing in oil prices.”