Brent faces headwinds from US-Iran de-escalation

The front-month ICE Brent contract has inched $0.23/bbl lower on the day, to trade at $65.61/bbl at 09.00 GMT.

IMAGE: Oil storage tanks. Getty Images

Upward pressure:

Brent’s price has felt some upward pressure after Washington and New Delhi struck a deal yesterday, that is expected to reduce US tariffs on Indian imports from 25% to 18%.

US President Donald Trump said that India has agreed to buy more US oil and reduce its imports of Russian crude.

If implemented, the move could force Moscow to reduce output, ultimately tightening the global market, according to two analysts from ING Bank.

Moreover, lower tariffs have eased concerns over further trade restrictions between the world’s two major oil consumers, reducing fears of a drag on global economic growth.

Downward pressure:

Brent crude has extended recent losses as geopolitical concerns from the Middle East continue to ease.

Earlier this week, Trump said Iran is “seriously talking” with Washington. “Oil prices have fallen due to reduced risk after President Trump stepped back from attacking Iran,” Price Futures Group’s senior market analyst Phil Flynn said.

Iran is the fourth-largest OPEC member, producing around 3.2 million b/d of crude oil. A US military intervention could potentially threaten oil supply flows from the Middle East, according to market analysts.

“President Trump downplayed threats from Iran’s supreme leader, Ayatollah Ali Khamenei, of a regional war, reiterating that he’s hopeful they’ll make a deal,” remarked ANZ Bank’s senior commodity strategist Daniel Hynes.

By Aparupa Mazumder

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