Brent climbs amid rising strains in Israel-Hezbollah ceasefire deal

The front-month ICE Brent contract has moved $0.20/bbl higher on the day, to trade at $72.65/bbl at 09.00 GMT.

PHOTO: Oil pumpjacks pictured at dusk. Getty Images

Upward pressure:

Brent’s price found some support as the geopolitical conflict in the Middle East intensified. The crucial ceasefire deal between Israel and Iran-aligned Hezbollah militants appears to be in a delicate condition, following cross-border strikes from both sides.

The Israel Defense Forces (IDF) said that the Lebanon-based militant group launched projectiles into Israeli territory on Monday, violating the terms of the ceasefire agreement between the two countries.

“Geopolitical risk is still high as the Israeli cease fire in Lebanon broke down,” Price Futures Group’s senior market analyst Phil Flynn said.

Analysts and traders also await OPEC’s ministerial meeting on Thursday where the group is expected to extend the ongoing production cut.

The eight members collectively cutting output by 2.2 million b/d are likely to continue through the first quarter of 2025, according to a Reuters report.

Downward pressure:

The crude oil supply outlook remains uncertain, with market analysts anticipating that the upcoming OPEC+ meeting will be crucial in determining price direction.

While the Saudi Arabia-led group had initially planned to gradually reverse the 2.2 million b/d production cut in October, it opted instead to extend the cuts through the end of the year to bolster oil prices.

OPEC+ has rescheduled its meeting to discuss the 2025 output policy. Originally planned for 1 December, the meeting will now be held virtually on 5 December.

“The oil balance does not need this additional supply as it will push the market into a large surplus,” two analysts from ING Bank said. “The challenge is that the group needs to find a balance between trying to support the market and limiting its loss in market share,” they added.

By Aparupa Mazumder

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