After Brent crude hit the $85 per barrel mark, media was flooded with analyst predictions of $100 oil by the end of the year. However, the market could be due for a correction.
Barclays noted that " although prices may continue to rise from current levels in October, the market is ripe for a correction," OilPrice.com reported.
"The rally could go even further this month, leading US policymakers, consumers, OPEC, and Saudi Arabia to react,” Barclays added, according to OilPrice.com.The British Bank forecasts that oil could rise to $90 per barrel close to November, as US sanctions on Iran are set to begin, followed by a decline.
US sanctions on Iran, among other factors, helped push the oil price up, as Iranian output dropped and other OPEC nations were either unable or unwilling to make up for the supply shortage. Meanwhile, US President Donald Trump has been vocal in his condemnation of OPEC, blaming the organization for higher crude prices and demanding they increase output.
Saudi Arabia could be hesitant to push for a sharp increase in OPEC production as the winter seasonal lull approaches; if OPEC increases output as demand goes down, this could lead to an oversupplied market. However, the country will reportedly increase its own output.
Saudi Arabian Energy Minister Khalid al-Falih said on Wednesday that the country would raise oil production in November from October's 10.7mn bpd.
Reuters reported that Falid said the current oil price surge "was not based on fiscal flows of supply and demand. This is created in financial markets."
Reports that China might have to cut imports from Iran spurred fears that Iran could see sharp supply losses in the near future, leaving other nations to fill the supply gap.
One possibility: restarting the Khafji and Wafra fields, which are located in the shared Neutral Zone between Saudi Arabia and Kuwait, and can produce up to 500,000 bpd. Earlier this week, Saudi Crown Prince Mohammed bin Salman bin Abdulaziz met with Kuwait's ruler, reportedly to talk about oil cooperation.
Al-Falih was part of the visit, but it is still unclear if his statement on increasing oil output is linked to the talks in Kuwait. Meanwhile, Kuwaiti Oil Minister Bakheet Al-Rashidi reportedly said last week that Kuwait was having talks with Saudi Arabia about retarting production at the two shared fields.