Brent plunges following OPEC+ decision

The front-month ICE Brent contract has lost $1.91/bbl on the day from Friday, to trade at $59.98/bbl at 09.00 GMT.

IMAGE: Oil barrels. Getty Images

Upward pressure:

Brent’s price found some support as pressure on Tehran’s oil exports mounted, after US President Donald Trump threatened to impose secondary sanctions on all countries buying Iranian oil and oil products on Thursday.

“All purchases of Iranian Oil, or Petrochemical products, must stop, NOW!” Trump wrote on social media app Truth Social.

The news comes after planned talks with Iran over its advancing nuclear program were postponed. Any country purchasing oil products from Iran “will not be allowed to do business with the United States of America in any way, shape, or form," Trump added.

“Crude oil prices recovered slightly… as US President Donald Trump threatened broader sanctions against buyers of Iranian crude,” two analysts from ING Bank noted.

Downward pressure:

Brent’s price plunged after leading oil producers group OPEC+ announced a larger-than-expected supply boost in June.  

The eight OPEC+ members participating in voluntary production cuts, have agreed to collectively increase supply by 411,000 b/d in June, from May’s production levels.

“OPEC+ is implementing another aggressive supply hike,” ING Bank’s head of commodities strategy Warren Patterson said. “Effective in June, this increase solidifies a shift in policy,” he added.

This is the second month in a row that they plan to expedite the unwinding of their joint 2.2 million b/d output cuts. “The higher production hikes appear to be in response to a lack of compliance by some members of the group,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

Aparupa Mazumder

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