Global oil prices spike to four-year highs

Global oil prices on Monday topped $80 a barrel for the first time in four years as a confluence of world events, including the renewed sanctions against Iran, stifle global supply.

The surge on Monday comes after a weekend report from Jpmorgan Chase that forecast oil prices could spike to $90 a barrel in upcoming months, especially if the United States does not allow its trading partners to buy Iranian oil.

“There is something of a perfect storm,” said energy analyst Pavel Molchanov of Raymond James, citing the Iran sanctions, strong global demand and production declines in Venezuela and Libya as reasons behind higher oil prices.

Gas prices, likewise, have risen to their highest levels in four years at about $2.85 for a gallon of regular gas compared to $2.57 a year ago, something that is acutely felt by many voters, according to the American Automobile Association.

Jpmorgan cited geopolitical risks that could push the price of oil toward $90 a barrel, including the trade war with China, NAFTA negotiations and particularly the chance of “a major miscalculation from sanctions” against Iran.

President Donald Trump plans to reimpose sanctions on Iran in November as he withdraws the United States from the Iran nuclear deal, potentially removing a significant oil supplier from the market.

Global demand is strong at more than 100 million barrels a day. Venezuela, once a key world supplier, has seen production decline dramatically in recent years. Iran sanctions have taken a bite out of production, and Libyan violence this past summer interfered with production, Molchanov said.