Brent crude moves higher on reports that Israel could strike Iran

The front-month ICE Brent contract has pushed $0.74/bbl higher on the day, to trade at $66.20/bbl at 09.00 GMT.

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Upward pressure:

Brent has gained following reports that Israel could soon be targeting Iran’s nuclear facilities. US intelligence suggests that Israel is actively preparing to strike Iran, according to a CNN report citing officials familiar with the matter.

“The news, based on US intelligence, may signal a significant escalation, prompting the oil market to price in a larger geopolitical risk premium for the region,” two analysts from ING Bank note.

Iran, an OPEC+ member, currently produces around 3.3 million b/d of oil, according to OPEC's latest oil market report.

“Such an escalation would not only put Iranian supply at risk, but also in large parts of the broader region,” the ING Bank analysts argue.

Downward pressure:

Brent has felt some downward pressure after the American Institute of Petroleum (API) reported another rise in US crude stocks, which could signal weaker oil demand. Commercial US crude oil inventories rose by about 2.5 million bbls in the week ending 16 May, according to API estimates.

The change in crude stocks was not as constructive as changes in gasoline and distillate inventories, ING Bank analysts said.

Official US government crude stocks data from the US Energy Information Administration (EIA) is due for release later today.

By Aparupa Mazumder

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