Brent remains above $107/bbl amid supply concerns
The front-month ICE Brent contract has inched $0.01/bbl lower on the day, to trade at $107.90/bbl at 09.00 GMT.
IMAGE: An oil storage facility. Getty Images
Upward pressure:
Brent crude’s price has continued to trade close to $110/bbl as Middle East supply concerns rattle the global oil market.
Washington has claimed that Tehran is willing to resort to diplomacy, while Iranian officials have dismissed such theories.
Moreover, oil prices have surged after the Iran-backed Houthis hit the 1,200 km East-West Pipeline, disrupting Riyadh’s critical export route, which funnels about 70% of its crude exports through the Red Sea terminal at Yanbu to circumvent the Strait of Hormuz.
The attack “has significantly curtailed the OPEC producer’s ability to export oil,” ANZ Bank’s senior commodity strategist Daniel Hynes said.
The pipeline shutdown could last for weeks and crude oil at Yanbu may deplete before the pipeline operations fully restore, market analysts said.
“The Houthi group also seized a strategic port and island directly on the Bab al-Mandeb Strait at the south end of the Red Sea,” Hynes added.
Downward pressure:
Brent’s price has felt some downward pressure after the American Petroleum Institute (API) reported a huge rise in US crude stocks.
US crude oil inventories increased by 7.14 million bbls in the week ending 11 September, the API reported.
A build in US crude stocks typically indicates lower demand for oil and can put some downward pressure on Brent's price.
By Aparupa Mazumder
Please get in touch with comments or additional info to news@engine.online
