Oil holds near four-year highs, with $100 looking more likely

Markets are edgy that an embargo on Iranian crude exports will be harsher than before and wreak havoc on markets. ─ Reuters  File

Markets are edgy that an embargo on Iranian crude exports will be harsher than before and wreak havoc on markets. ─ Reuters File

United States oil prices hit their highest level since November 2014 on Tuesday and Brent crude was also near a four-year peak reached the previous day, with markets preparing for tighter supply once U.S. sanctions against Iran kick in next month.

Benchmark West Texas Intermediate, or WTI, crude futures rose to the upper 75-dollar per-barrel range on Monday.

Crude has rallied about 16 percent since mid-August as supply losses from Iran to Venezuela continued to rattle global markets.

The global crude oil benchmark LCOc1 lost 48 cents to $84.50 per barrel by 1002 GMT after reaching a new four-year high of $85.45 in the previous session.

Futures rose as much as 0.4 percent in NY after closing Monday at the highest since November 2014.

Brent for December settlement increased as much as 54 cents to $83.27 a barrel on the ICE Futures Europe exchange and was at $83.17 at 12:22 p.m.in Singapore.

Most of the bets on rising prices are overwhelmingly concentrated on Brent Crude, rather than on WTI or gasoline or other oil products.

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Crude oil is trading in a thin range of $73.20 - $73.65 after violating the triple top pattern of $72.75.

The US sanctions on Iran's oil industry could cripple the embattled nation's already struggling economy as it is created to ban the sale of the crude exports from the world's No. 3 producer in the Organization of Petroleum Exporting Countries (OPEC).

Where OPEC is anxious about the potential for a slowdown in oil consumption growth as a result of rising prices and a possible downturn in the global economy, traders are more anxious about the impact of sanctions on Iran.

"It shows that the market is not convinced about the ability of the producers' group to replace Iranian barrels", said Tamas Varga, an analyst at PVM Oil Associates Ltd.in London. Kuwait has all but stopped shipping crude to the US for the first time since the aftermath of Saddam Hussein's invasion in 1990, eroding an economic link between Washington and the Arab petro-monarchy.

With oil prices soaring, there are concerns over their inflationary effect on demand growth, especially in Asia's emerging markets where weakening currencies are further adding to high fuel import costs.

Still, oil prices drew support from worries that Iranian production will drop sharply after USA sanctions go into effect on November 4. China's Sinopec said it halved loadings of Iranian oil in September.

The US is rapidly increasing its production.

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