Brent gains on supply disruption fears

The front-month ICE Brent contract has gained $0.20/bbl on the day from Friday, to trade at $74.13/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

The price of Brent crude has moved higher as growing supply disruption concerns have helped offset oversupply fears.

The US government’s latest sanctions on Iran’s oil exports have crimped Iranian oil flows in the physical oil market, according to analysts.

“US sanctions on Iran’s oil industry appear to be biting with at least 11 US sanctioned tankers containing Iranian oil reportedly sitting idled off the coast of Malaysia,” ANZ Bank senior commodity strategist Daniel Hynes said.

Some of the vessels, containing as much as 17 million bbls, “have been sitting there for over a month,” he added, noting that the news underscores the disruptions to trade flows.

Downward pressure:

Over the weekend, US President Donald Trump threatened to hit buyers of Russian crude oil with additional 25-50% tariffs, Reuters reports. This news has put some downward pressure on Brent’s price.

Trump’s administration has warned of potential tariffs on countries that continue purchasing Russian crude oil, if a ceasefire deal with Ukraine fails to materialise.

It is not the potential tariffs on Russian oil themselves that weigh on Brent, but their knock-on effect on oil trading and global economic growth.

The recent wave of Trump’s tariff threats has rattled market analysts and investors, sparking fears of a global trade war that could dampen demand for commodities like oil. Weak crude oil demand could lead to lower prices, according to market analysts.

By Aparupa Mazumder

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