Brent gains on supply concerns
The front-month ICE Brent contract has moved $1.75/bbl higher on the day, to trade at $72.23/bbl at 09.00 GMT.
IMAGE: Oil storage tanks. Getty Images
Upward pressure:
Brent crude’s price has surged as market participants shift focus from oversupply concerns to the risk of a potential supply crunch in the coming months.
Supply crunch concerns stem from US President Donald Trump’s recent remarks indicating he may shorten Russia’s deadline to end the Ukraine conflict from 50 days to just 10–12 days.
“Failing to reach a deal risks additional sanctions on Russia and secondary tariffs on countries importing its oil,” said two analysts from ING Bank.
The warning follows additional sanctions by the EU and the UK, targeting Russia’s energy and shipping sectors.
“Russia exports more than 7m b/d [7 million b/d] of crude oil and refined products. Thus, effective 100% secondary tariffs would lead to a dramatic shift in the oil market,” the two analysts added.
Downward pressure:
A build in US crude inventories has put some downward pressure on Brent futures.
US crude oil inventories rose by 1.54 million bbls in the week ending 25 July, according to estimates from the American Petroleum Institute (API).
A rise in US crude stocks can indicate lower demand for oil and weigh on Brent's price.
VANDA Insights’ founder Vandana Hari described the stocks data as “broadly stable.”
By Aparupa Mazumder
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