Brent gains on the back of supply tightness fears
The front-month ICE Brent contract has moved $0.42/bbl higher on the day, to trade at $73.93/bbl at 09.00 GMT.
PHOTO: Crude oil barrels. Getty Images
Upward pressure:
Concerns over a shortage in global oil supply have supported Brent’s price gains this week, with the growing number of US sanctions on leading oil producers, including Iran and Venezuela.
“[Brent] crude oil prices extended gains amid signs of near-term tightness in the physical market,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.
The Donald Trump-led US administration’s sanctions on Iran’s oil export have significantly slashed Iranian oil flows in the physical oil market, according to analysts.
At least 11 US-sanctioned oil tankers carrying Iranian oil are idling off the coast of Malaysia, Bloomberg reports. The news has highlighted the disruptions to trade flows, according to Hynes.
Additionally, revoking oil company Chevron’s licence to operate and export crude oil from Venezuela has put about 200,000 b/d at risk, Hynes said. “Venezuela is already looking to find alternative buyers,” he added.
Downward pressure:
Brent’s price felt some downward pressure from US tariffs-related demand growth concerns.
Earlier this week, Trump announced import tariffs of 25% on cars and light trucks coming into the US. These are set to come into force from next week.
“The scope, scale, and sequencing of the tariff package remain highly speculative,” SPI Asset Management managing partner Stephen Innes said.
However, the latest bout of Trump tariffs has pushed market analysts and investors over the edge, fearing a global trade-war and a subsequent slowdown in demand for commodities like oil.
“Traders are now reassessing whether the tariff reprieve narrative was a one-day wonder or something with real staying power,” Innes added.
Weak crude oil demand could lead to lower prices, according to market analysts.
By Aparupa Mazumder
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