Brent declines on signs of de-escalation in the Middle East
The front-month ICE Brent contract has declined by $4.30/bbl on the day from Friday, to trade at $83.98/bbl at 09.00 GMT.
IMAGE: Oil pumpjack. Getty Images
Upward pressure:
Brent’s price has felt some upward pressure, as the prospect of worsening supply disruptions in the Middle East continues to hang over the market.
On Friday, Tehran launched attacks on US military assets, including the Ahmad al-Jaber Air Base in Kuwait and facilities at Bahrain’s Sheikh Isa Air Base.
The Middle East conflict has “spread well beyond Iran and the United States,” according to SPI Asset Management managing partner Stephen Innes.
The latest attacks come shortly after Saudi Arabian energy infrastructure came under attack, prompting Washington and Riyadh to launch a joint military operation against Iran-aligned militias.
“Saudi energy infrastructure has been attacked. Iraqi militias, the Houthis and other Iranian-aligned groups have widened the battlefield across the Gulf and Red Sea,” Innes remarked.
Downward pressure:
Oil prices have opened the week on a lower footing, after US President Donald Trump called off a planned round of military strikes on Iran, fuelling hopes of a diplomatic breakthrough.
“The perimeters of a deal have been agreed to,” Trump said on Truth Social, putting some downward pressure on Brent.
“The immediate threat of escalation has eased, but Iran has yet to confirm that a workable diplomatic understanding exists,” Innes said.
Additionally, Iran’s foreign minister Abbas Araghchi said that negotiations with Oman regarding a new shipping arrangement via the Strait of Hormuz are in its final stages.
“Until tankers begin moving safely through Hormuz again, claims of diplomatic progress should be treated cautiously,” Innes added.
By Aparupa Mazumder
Please get in touch with comments or additional info to news@engine.online
