Brent gains on renewed supply fears

The front-month ICE Brent contract has gained $0.93/bbl on the day, to trade at $73.80/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Oil prices have moved higher on renewed supply jitters in the global oil market after Russia’s Foreign Minister Sergei Lavrov said that Moscow will now enter into a "new phase of Western war" after Ukraine used US-built long-range missiles on targets deep inside the Russian territory over the weekend.

With the onset of a new phase in the Ukraine-Russia conflict, oil prices are expected to gain momentum as supply concerns will keep traders on their toes.

Moreover, Russian President Vladimir Putin updated the country’s nuclear doctrine on Tuesday, establishing conditions under which Russia could strike from the world's biggest nuclear arsenal, Reuters reported.

Brent’s price moved higher after Putin approved an “updated nuclear doctrine expanding conditions for using atomic weapons,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

Downward pressure:

Brent’s price felt some downward pressure after the American Petroleum Institute (API) reported a bigger-than-expected rise in US crude stocks.

Crude oil inventories in the US surged by 4.7 million bbls in the week that ended 15 November, according to API. The weekly inventory build was much higher than market expectations of an 800,000-bbl rise during the week.

A rise in US crude stocks indicates weakness in oil demand, which can put downward pressure on Brent’s price.

Johan Sverdrup oil field in Norway has resumed operations after a power outage led to a halt in production on Monday, Reuters reported. This news has added some downward pressure on Brent.

The oil field produces around 755,000 b/d, “but will take some time to return to full capacity,” two analysts from ING Bank said.

By Aparupa Mazumder

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