Brent gains on supply tightness fears

The front-month ICE Brent contract has moved $0.78/bbl higher on the day, to trade at $72.08/bbl at 09.00 GMT.

CONCEPT: Oil barrels on a price growth chart background. Getty Images

Upward pressure:

Brent’s price moved higher after the US administration tightened its stance on Iran, aiming to drive the country’s oil exports to zero.

US President Donald Trump has imposed another set of strict sanctions on 19 entities and vessels involved in shipping “millions of barrels” of Iranian crude oil. The news has supported supply-related concerns in the global oil market, according to analysts.

“Crude oil gained as the US ramped up efforts to curtail Iranian oil exports,” ANZ Bank’s senior commodity strategist Daniel Hynes said. “We expect Iran's oil exports to fall by around 1mb/d [1 million b/d],” he added.

Besides, OPEC+ members who breached production quotas in the previous months announced new plans yesterday to compensate for the overproduction. Brent’s price gains were “spurred by an unexpected OPEC/non-OPEC plan to rein in its production and the US announcing yet another wave of sanctions against Iranian oil,” VANDA Insights’ founder and analyst Vandana Hari said.

Downward pressure:

Brent’s price felt some downward pressure following a rise in US crude stocks.

Commercial US crude oil inventories increased by 1.7 million bbls to touch 437 million bbls for the week ending 14 March, according to data from the US Energy Information Administration (EIA).

A build in inventories typically signals weaker oil demand, which can put downward pressure on Brent’s price.

By Aparupa Mazumder

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