Brent moves lower as IEA members pledge emergency stock release

The front-month ICE Brent contract has declined by $1.14/bbl on the day, to trade at $104.13/bbl at 09.00 GMT.

IMAGE: Crude oil storage units. Getty Images

Upward pressure:

Brent crude has traded above $100/bbl so far this week, as the conflict in the Middle East has shown no signs of easing in its third week.

Last week, Iran said the world should brace for oil at $200/bbl as its forces continue to target commercial vessels transiting the Strait of Hormuz, Reuters reported.

“There have been no signs of de-escalation,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Meanwhile, US forces have hit Iranian military bases on the strategic Kharg Island. US President Donald Trump warned that Washington could target Tehran’s key oil infrastructure on the island if the Strait of Hormuz remains closed.

“Oil prices spiked… as the US attacked Iran’s oil export lifeblood, Kharg Island,” Price Futures Group’s senior market analyst Phil Flynn said.

Downward pressure:

The International Energy Agency (IEA) has announced a major release of 400 million bbls from strategic reserves to ease the price shock that is currently rattling the global oil market. The news has put some downward pressure on Brent’s price.

The IEA’s pledge marks the “biggest emergency drawdown in IEA history – aimed at cooling off the red-hot crude market amid the ongoing chaos in the Middle East with Iran,” Flynn said.

Member countries in the Americas have committed 195.8 million bbls. Asia and Oceania members have pledged 108.6 million bbls, while Europe has committed 107.5 million bbls, the IEA said.

“The US is ponying up 172 million barrels, Japan chipping in 80 million, and EU heavyweights such as Germany and Austria pledging their shares,” Flynn added.

By Aparupa Mazumder

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