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Oil traders are betting that crude oil prices could rise to $100 a barrel next year. Until recently, many people thought this was unthinkable because of record U.S. output growth and relatively stable global demand.
But the impending resumption of U.S. sanctions against Iran and the bottleneck that has prevented U.S. crude oil from entering the market have pushed oil prices up to a four-year high.
Despite claims by major oil producers that supplies are abundant, hedge funds and speculators are increasingly sceptical, betting that the oil market will rise further when sanctions on Iranian crude oil exports resume on November 4.
This bullish atmosphere has a broad view in the US option market. According to the Chicago Mercantile Exchange (CME), West Texas Intermediate Oil (WTI) subscription options, which are priced at $100 in December 2019 -- betting crude oil futures will hit $100 by the end of 2019 -- the number of open positions has increased by 30% over the past week to a record high of 31,000.
"Over the past two weeks, there have been growing signs that even major oil consumers like India and China will suspend Iranian crude oil imports from November," said John Saucer, vice president of research and analysis at Mobius Risk Group.
Therefore, he said, "these sanctions may be more effective than people think."
The International Finance Association (IIF) said Iran's oil exports fell to 2 million barrels a day in September from 2.8 million barrels a day in April.
Estimates of how much Iranian crude oil exports will be affected range from 500,000 barrels per day to 2 million barrels per day, and uncertainty surrounding the impact will ultimately drive oil prices up and down.


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