Brent opens week above $100/bbl amid faltering ceasefire hopes

The front-month ICE Brent contract has gained by $4.84/bbl on the day from Friday, to trade at $102.76/bbl at 09.00 GMT.

IMAGE: Oil storage tanks. Getty Images

Upward pressure:

Brent crude’s price has rallied as hopes of a Pakistan-mediated ceasefire deal between the US and Iran lost steam over the weekend, following 21 hours of failed peace negotiations in Islamabad.

The US Central Command (CENTCOM) will enforce a blockade on vessels entering and exiting Iranian ports today, it said earlier.

“Expectations of an end to this conflict were dashed after weekend talks ended without agreement,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Meanwhile President Donald Trump has signalled Washington’s plan to resume some military operations in Iran.

These measures will “restrict Iran’s ability to export oil and will exacerbate the supply disruptions the market is experiencing,” Hynes added.

Downward pressure:

Brent’s price has felt some downward pressure following firm US inflation data, as it dampens expectations of further interest rate cuts by the US Federal Reserve (Fed) this year.

The US inflation rate, based on the Consumer Price Index for all urban consumers (CPI-U), increased by 0.9% in March, higher than the 0.3% growth noted in February, according to the US Bureau of Labor Statistics (BLS).

On an annual basis, the US CPI advanced 3.3% last month – much higher than the 2.4% growth seen in February.

Higher interest rates in the US can weigh on demand growth and make dollar-denominated commodities like oil more expensive for holders of other currencies.

By Aparupa Mazumder

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