Brent gains after US rejects Iran’s response to peace offer

The front-month ICE Brent contract has gained by $3.85/bbl on the day from Friday, to trade at $104.15/bbl at 09.00 GMT.

IMAGE: Crude oil pumpjacks. Getty Images

Upward pressure:

Brent crude has moved closer to $105/bbl mark at the start of this week, as hostilities in the Middle East resurfaced over the weekend – effectively undermining expectations of a US-Iran ceasefire deal.

US President Donald Trump has rejected Iran’s response to a US-drafted ceasefire proposal, stating the response was “totally unacceptable,” without revealing any details of Iran’s reply.

Brent crude’s price “jumped this morning after the US rejected Iran’s latest peace plan proposal,” two analysts from ING Bank noted.

Last week, the US Navy struck three Iran-linked vessels, allegedly trying to transit Iran’s territorial waters – which is currently under a US blockade.

“Oil prices remain highly sensitive to noise around Iran, highlighting the significance of the ongoing supply disruptions in the Persian Gulf,” ING Bank analysts said.

Downward pressure:

Brent crude’s price has felt some downward pressure after Baker Hughes reported a rise in US crude oil rig activity.

The total number of rigs drilling for crude oil in the US rose by two to 410 units last week.

The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.

By Aparupa Mazumder

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