Brent crude LCOc1 settled up $2.40 or 3.1 percent at $81.20 a barrel, after touching an intraday high of $81.39, the highest since November, 2014.
The United States has sent mixed messages to OPEC and its allies over the last week about whether they need to do more to raise oil production and hold down prices. Brent crude futures were at 79.84 dollars per barrel. Early last week, the market was supported by a report which said Saudi Arabia would be comfortable with Brent prices over $80 a barrel.
Opec and other producers had discussed raising output by 500,000 barrels a day, Reuters reported.
Fund managers are betting the introduction of sanctions on Iran will result in a shortage of seaborne crude on global markets even while the landlocked US inland market remains plentifully supplied.
"We are not targeting a price, we are aiming for the stability of the market", for its part, has argued the minister emirati Energy, Souhail al-Mazrouei, chairman of the conference of the Opec.
While the opposition parties have blamed the government for the rise in prices, the Centre has reiterated its stand that prices in India are a function of global crude oil moves.
Major oil trading houses are predicting the return of $100 crude for the first time since 2014 as the market braces for the loss of Iranian supplies because of US sanctions. "The market is well-supplied", Saudi Energy Minister Khalid Al-Falih said after a meeting of OPEC and its allies over the weekend.
In June this year, however, after months of cutting by more than their pact had called for, largely due to involuntary reductions from Venezuela and other producers, they agreed to boost output by returning to 100 percent compliance.
Oil prices could soon begin to surge
"The conditions of the market and the production status of oil producers are not as such to allow finding an easy replacement for Iran's oil and remove it from oil markets".
Saudi Arabia says it has almost 2 million barrels per day of spare production capacity to be exploited.
Futures in London rose as much as 1.7 per cent. OPEC and its partners gave a tepid response to President Donald Trump's demand that rapid action be taken to reduce prices, saying they would boost output only if customers wanted more cargoes.
"We will remember", the president added, implying that USA security support might be reassessed if OPEC members fail to cut crude prices. "The markets are adequately supplied".
Despite the bullish sentiment, some traders said current prices already reflected the tighter market, and that more oil would be coming in 2019.
Officials from the Organization of the Petroleum Exporting Countries and allies including Russian Federation, meeting in Algiers, said that they increased production in recent months, and customers now have adequate supplies.
"We expect that those OPEC countries with available spare capacity, led by Saudi Arabia, will increase output but not completely offset the drop in Iranian barrels", said Edward Bell, commodity analyst at Emirates NBD bank.