Brent holds steady amid geopolitical risks and demand growth concerns
The front-month ICE Brent contract has inched $0.09/bbl lower on the day from Friday, to trade at $71.99/bbl at 09.00 GMT.
PHOTO: Crude oil barrels. Getty Images
Upward pressure:
Brent crude’s price has remained steady over the weekend.
Last week, the US Department of Treasury sanctioned a Chinese oil refinery and its chief executive officer for allegedly buying sanctioned Iranian oil, and several other vessels linked to Tehran’s shadow fleet of ships. This news has supported Brent’s price, according to market analysts.
“The move is having an impact on the physical market, with spot and near-term futures gaining for oil from the Middle East,” ANZ Bank’s senior commodity strategist Daniel Hynes said.
Additionally, OPEC+ members that have repeatedly breached output quotas announced plans for further cutbacks to compensate for overproduction. This move could offset the planned production hikes set to begin in April.
“However, questions remain about whether members will actually stick to the compensation plan and cut output,” two analysts from ING Bank noted.
Downward pressure:
Oil demand growth concerns have put downward pressure on Brent’s price in recent days, following a 1.7 million-bbl rise in commercial US crude oil inventories last week.
A build in inventories typically signals weaker oil demand, which can cap Brent’s price gains.
Moreover, officials from the US and Russia have commenced talks in Saudi Arabia today, Reuters reports. The talks aim to advance towards a broader ceasefire deal in Ukraine, the report adds.
US President Donald Trump is also pushing for a separate Black Sea maritime ceasefire deal as a precursor to a wider agreement. The talks follow Washington’s negotiations with Kyiv yesterday, as it continues to ramp up efforts to end the three-year conflict in eastern Europe.
A ceasefire deal between Russia and Ukraine could see the US lifting its sanctions on Russian oil exports, which in turn could increase global oil supply, according to market analysts.
By Aparupa Mazumder
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