Brent gains following Trump-Xi meeting
The front-month ICE Brent contract has moved $2.91/bbl higher on the day, to trade at $109.15/bbl at 09.00 GMT.
IMAGE: Oil pumpjacks. Getty Images
Upward pressure:
Brent crude’s price is set to end the week near $110/bbl as tensions in the Middle East remain elevated.
After the highly anticipated US-China summit this week, President Donald Trump said his patience with Iran was running out, Reuters reported.
The White House said Trump and Chinese President Xi Jinping agreed that Iran must neither control the Strait of Hormuz nor possess nuclear weapons.
“Both countries agreed that Iran can never have a nuclear weapon,” the White House said in a statement.
The statement has heightened anxiety in oil markets, with analysts increasingly anticipating a prolonged closure of the Strait of Hormuz – a crucial conduit for about one-fifth of the world’s seaborne oil flows.
“Energy markets remain extremely sensitive to developments in the Middle East, showing the significance of the supply disruptions we are witnessing,” ING Bank’s head of commodities strategy Warren Patterson said.
Downward pressure:
Global energy agencies have cut their oil demand growth forecasts amid the ongoing US-Iran conflict, capping some of Brent’s price gains.
The Paris-based International Energy Agency (IEA) expects global oil demand to contract by 420,000 b/d in 2026 to 104 million b/d – 1.3 million b/d short of its pre-war forecast.
Global oil demand is expected to contract by about 2.5 million b/d in the second quarter of this year, the IEA said in its latest oil market report.
Meanwhile, the US Energy Information Administration (EIA) forecasts global oil demand to grow by an average of 200,000 b/d to 104.1 million b/d in 2026 – about 500,000 b/d lower than its previous forecast.
The decline in oil demand will primarily occur in Asia as it is more reliant on crude supplies from the war-torn Middle East region, the EIA said.
“Another element which has contained the market is that we have already started to see demand destruction in the oil market,” Patterson said.
By Aparupa Mazumder
Please get in touch with comments or additional info to news@engine.online
