Brent drops below $70/bbl as Russia agrees to halt attacks on energy infrastructure
The front-month ICE Brent contract has declined by $1.95/bbl on the day, to trade at $69.92/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
Brent’s price found some support amid rising instability in the Middle East.
US President Donald Trump vowed to continue military strikes on Yemen-based Houthi armed group and warned that Iran would be held responsible for any attacks carried out by the group, which has disrupted shipping in the Red Sea.
Meanwhile, Israeli airstrikes in Gaza have killed at least 200 people, according to Palestinian health authorities, ending a ceasefire agreement in the region that began in January. This has heightened concerns about potential threats to oil supply, Reuters reported.
Oil prices were “pushed higher as the escalating tensions in the Middle East raised concerns renewed risks to supply in the region,” said ANZ Bank’s senior commodity strategist Daniel Hynes.
Downward pressure:
Brent futures declined after Russia agreed to Trump's proposal for a temporary halt in attacks between Moscow and Kyiv on each other's energy infrastructure, Reuters reported. This development could lead to more Russian oil entering the global market.
Market watchers suggest that a potential ceasefire might ease sanctions on Russia, increasing oil supply and lowering prices. This expectation has put pressure on crude prices.
“Crude futures were extending… losses, albeit marginally… mostly in response to an initial breakthrough in the Ukraine war situation,” noted Vandana Hari, founder and analyst at VANDA Insights.
Meanwhile, US crude oil inventories rose by 4.6 million bbls in the week ending 14 March, according to American Petroleum Institute (API) estimates cited by Trading Economics. The increase far exceeded market expectations of a 1.2 million-bbl rise. A buildup in inventories typically signals weaker oil demand, which can put downward pressure on Brent's price.
“Crude futures were also feeling some pressure… from a bearish stocks report from the American Petroleum Institute,” Hari added.
By Tuhin Roy
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