Brent declines on prospects of de-escalation in the Middle East conflict

The front-month ICE Brent contract has moved $6.58/bbl lower on the day, to trade at $108.97/bbl at 09.00 GMT.

IMAGE: Oil storage facility. Getty Images

Upward pressure:

Brent crude is poised to end the week near $110/bbl as critical energy infrastructure in the Middle East continues to be targeted by Iranian air airstrikes.

In Kuwait, state-operated Kuwait Petroleum Corp has suspended operations at its Mina Al-Ahmadi and Mina Abdullah refineries, after they were attacked by Iranian drones, the Wall Street Journal reported.

Earlier this week, Saudi Arabia’s state-owned oil company Aramco’s Samref refinery – which it jointly owned by US-based ExxonMobil – at the Red Sea port of Yanbu was targeted with a missile.

“Yanbu is critical for Saudi Arabia and has increased crude exports since the blockage of the Strait of Hormuz,” ANZ Bank’s senior commodity strategist Daniel Hynes said, adding that the attack could remove 5-6 million b/d of oil supply.

Downward pressure:

Brent’s price rally lost steam after US President Donald Trump said in a social media post that Washington or Tel Aviv would not target Iranian oil and gas infrastructure again.

Israeli Prime Minister Benjamin Netanyahu indicated the same in a press conference later.

Adding further downward pressure on oil prices, US Treasury Secretary Scott Bessent said that Washington could soon lift some sanctions on Iranian crude stranded at sea to ease supply constraints caused by the closure of the Strait of Hormuz.

“There are also suggestions that President Trump may ease some sanctions on Iranian oil to help limit price gains,” two analysts from ING Bank said. “Additional downward pressure reflects the US administration ruling out export restrictions on oil,” they added.

By Aparupa Mazumder

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