Brent gains as the Middle Eastern conflict amplifies

The front-month ICE Brent contract gained $0.69/bbl on the day, to trade at $82.63/bbl at 09.00 GMT. 

PHOTO: Oil pumps working under the sunrise sky. Getty Images

Upward pressure:

Escalating tensions in Gaza are driving up oil prices, with Brent futures experiencing upward pressure.

The conflict intensified as the Iran-aligned Houthi group launched two ballistic anti-ship missiles at the Pinocchio, a Liberian-flagged container vessel in the Red Sea, the US CENTCOM said.

This prompted six self-defense strikes by the US CENTCOM. These strikes successfully intercepted 18 ballistic missiles and one unmanned underwater vessel in Houthi-controlled Yemeni areas.

Analysts from VANDA Insights attribute the heightened oil market sentiment to the ongoing Gaza war and shifting expectations for the US economy, as “both are keeping players anxious and guessing.”

Downward pressure:

Brent futures are facing some downward pressures due to concerns over weak global oil demand growth. The crude oil market is “edging lower reluctantly” as apprehensions about China's economy continue to raise fears regarding demand, despite tightening global supplies, according to Phil Flynn, senior market analyst at Price Futures Group.

The decline in China's producer price index (PPI) by 2.7% year-on-year in February adds to these concerns. Flynn further highlights that despite Chinese refinery runs reaching all-time highs, anxiety persists regarding the state of the country's economy, contributing to bearish speculations in the market.

Moreover, oil investors are eagerly waiting for monthly oil market reports from key global agencies, including OPEC and the US Energy Information Administration (EIA). Analysts from ING Bank emphasise the importance of these reports in providing clarity on the demand outlook for oil, underscoring the market's current state of anticipation.

By Tuhin Roy

Please get in touch with comments or additional info to news@engine.online