Brent climbs as US-Iran reignite fighting

The front-month ICE Brent contract has gained by $4.56/bbl on the day, to trade at $91.66/bbl at 09.00 GMT.

IMAGE: Oil storage tanks. Getty Images

Upward pressure:

Renewed fighting between the US and Iran has sent Brent crude’s price higher once again.

The US Central Command (CENTCOM) has struck Iranian military sites, including missile facilities and maritime capabilities, erasing hopes of any de-escalation in the region.

Moreover, Tehran has rejected Oman’s proposal to evenly share control of the shipping lanes in the Strait of Hormuz, seeking complete control of the critical oil chokepoint, Reuters reported.

There is also news that Yemen’s Iran-backed Houthi militants plan to impose fees on commercial vessels navigating the Bab al-Mandeb Strait – another important oil transit routes in the region.

“The daily question has been whether crude can still leave the Gulf and whether the next headline will remove another few million barrels from the global supply map,” SPI Asset Management managing partner Stephen Innes noted.

Downward pressure:

While there are no immediate downward pressures acting on Brent crude’s price today, market analysts are watching closely for even the smallest hint of de-escalation in the Middle East.

Earlier this week, US President Donald Trump said that Washington and Tehran have engaged in talks and that there is a “good chance” of a peace deal.

“Even in the event of a deal, one would expect that the market will need to continue to price in a large risk premium, given that recent events have demonstrated how quickly a deal can unravel,” two analysts from ING Bank noted.

By Aparupa Mazumder

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