Brent crude futures settled up 67 cents at US$81.87 a barrel. This hike might take place for the first time since the year 2014 as the market braces for the loss of Iranian supplies because of the US penalty.
USA crude inventories rose 2.9 million barrels last week, the American Petroleum Institute was said to report, despite expectations government data due Wednesday will show a decline of 1.5 million barrels. They rose 0.3 percent on Tuesday to close at their highest level since July 11. The growth will come at the time when OPEC's third largest producer, Iran, has been losing clients due to USA sanctions against its oil sector which come into force on November 4.
The bank said it believes OPEC and Russian Federation will offset supply losses out of Iran, and a large jump in prices would likely lead to Trump authorising a release from the country's strategic reserves.
U.S. officials, including President Donald Trump, are trying to assure consumers and investors that enough supply will remain in the oil market while requesting producers raise their output.
"Trump blames OPEC for what he has created and caused: the rise of the price of oil and disturbance in the market".
However, Trump's decision in May to pull out of the 2015 Iran nuclear deal and restore sanctions on that country, OPEC's third-biggest producer, is also a major factor behind this year's rally.
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"We will ensure prior to the re-imposition of our sanctions that we have a well supplied oil market", Washington's special envoy for Iran, Brian Hook, told a news conference at the United Nations General Assembly on Tuesday evening.
"Trader focus remains on the Brent contract trading at four-year highs", said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
To counter the recent falling supply from Iran, OPEC and other oil producers are considering to raise the output of crude oil by 500,000 bpd.
Speaking at the Asia Pacific Petroleum Conference (APPEC) in Singapore, the president of commodity merchant Mercuria Energy Trading, Daniel Jaeggi, said that almost two million barrels per day of crude could be removed from the market by the fourth quarter of 2018 due to these sanctions.
That threw a bit of cold water on bullish forecasts issued this week by trading giants Mercuria Energy Group Ltd and Trafigura Group, who said that supply losses could send oil back above $100 a barrel.
Official figures on stockpiles and refinery runs from the US Department of Energy's Energy Information Administration are due at 10:30 a.m. EDT (1430 GMT) on Wednesday.