The crude oil markets are further supported by the looming US sanctions on Iran that are set to start on November 4. From its lows registered in August, Brent has risen by 20%, mostly on concerns that some additional shortfalls could tighten the already balanced market further.
Apart from Iran, traders fear that Venezuelan production will continue to decline, which could bring a deficit of global supply at some point. Against this backdrop, despite the dollar bullishness, Brent climbed above the $85 threshold for the first time since early-November 2014 yesterday. On Tuesday, we see some profit-taking and a retreat of prices below the key handle.
In a wider picture, as the barrel is getting closer to $100, supply-side fears could be replaced by demand-side concerns as the elevated prices may derail the global demand and erode the economic growth, especially amid the ongoing US-China trade war and the decline in many emerging market currencies. And this is a risk for a $100 scenario.