Brent moves lower on demand growth concerns

The front-month ICE Brent contract has lost $0.18/bbl on the day, to trade at $74.42/bbl at 09.00 GMT.

PHOTO: An oil pumpjack pictured at dusk. Getty Images

Upward pressure:

Supply-side issues in the global oil market have lent some support to Brent crude’s price.

Over the weekend, US President Donald Trump intensified pressure on Iran – one of the largest OPEC producers – to immediately come to a deal with Washington and abandon its pursuit of nuclear weapons.

Brent crude’s price gained after “he [Trump] threatened to attack the oil producer if it did not sign a deal renouncing nuclear weapons,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Besides, pressure remains on Russia after the US President slammed Russian President Vladimir Putin’s latest remarks on Ukrainian counterpart Volodymyr Zelenskyy’s legitimacy in running the country and threatened to further curb Moscow’s oil exports.

“For now, it appears to be just a threat to Russia and Iran,” two analysts from ING Bank said. “However, if it becomes a reality, it creates plenty of upside risk to the market given the significant oil export volumes from both countries,” they added.

Downward pressure:

Brent’s price lost the previous day’s gains as fears of a decline in demand growth escalated amid uncertainty surrounding Trump’s tariff plans.

Washington is likely to announce tariffs on all global trade partners later today, while tariffs on automobile imports are expected to kick in tomorrow. These tariffs threats have sparked concerns of a brewing global trade war that could dampen demand for commodities like oil, according to market analysts.

Brent crude’s price edged lower “as markets awaited US President Donald Trump unveiling his reciprocal tariffs plan [on trade partners] later in the day,” VANDA Insights’ founder and analyst Vandana Hari remarked.

Brent’s price felt more downward pressure after the American Petroleum Institute (API) reported a 6 million-bbl surge in US crude oil inventories.

A buildup in inventories typically signals weaker oil demand, which can drag Brent's price down.

By Aparupa Mazumder

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