Brent in limbo as market scrutinises US-Iran talks

The front-month ICE Brent contract has dropped by $0.20/bbl on the day from Friday, to trade at $79.29/bbl at 09.00 GMT.

IMAGE: Oil storage tanks. Getty Images

Upward pressure:

Brent’s price has felt some upward pressure amid weekend reports of renewed hostilities, casting doubt on the US-Iran peace accord.

The Israel Defense Forces (IDF) struck targets in southern Lebanon over the weekend, breaching a key provision of the peace deal signed in France last week.

“Oil prices have moved higher this morning as the US-Iran ceasefire gets off to a rocky start,” two analysts from ING Bank noted.

Shortly after the IDF strikes, Tehran announced it had again closed the Strait of Hormuz to commercial vessels as Israel continued to attack Lebanon.

“For energy markets, the key factor is still whether oil and LNG flows from the Persian Gulf continue to recover, despite all the rhetoric,” the analysts said.

Downward pressure:

Talks between high-ranking officials from Washington and Tehran went well in Switzerland earlier today, according to reports.

Both countries have agreed to finalising a peace deal within the next 60 days that will end hostilities in Lebanon and reopen the Strait of Hormuz to commercial vessel traffic.

The talks, initially scheduled for Friday, were delayed until Sunday. It took place shortly after Israel launched drones on targets in Southern Lebanon.

“The US-Iran deal marks an inflection point for oil markets,” ANZ Bank’s senior commodity strategist Daniel Hynes noted. “Crude oil prices are expected to remain under pressure as supply through the Strait of Hormuz recovers,” he added.

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online