Brent retreats as Middle East tensions show signs of easing

The front-month ICE Brent contract has dropped by $13.99/bbl on the day, to trade at $92.81/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Concerns over smooth transit through the Strait of Hormuz continues to support oil prices after Iran’s Revolutionary Guards said it would not allow crude oil to be shipped from the Middle East if US and Israeli attacks continue.

The global oil market “will need to see a resumption of oil flows through the Strait of Hormuz to sustain a move lower in oil prices,” two analysts from ING Bank said.

Downward pressure:

Brent futures have fallen after climbing above $100/bbl in the previous session, as the conflict between the US, Israel and Iran has shown signs of de-escalation.

US President Donald Trump yesterday said that the war could end earlier than his previously stipulated timeframe of four weeks, Reuters reported. However, he cautioned that the US could intensify attacks if Iran blocks traffic through the Strait of Hormuz.

Additionally, the Group of Seven (G7) developed countries announced yesterday that they were prepared to take necessary steps to curb rising global oil prices but refrained from committing a joint release of oil from emergency reserves.

Reports that “G7 finance ministers were considering a significant release of oil from strategic reserves, along with comments from President Trump suggesting that the war might end soon, sent prices plunging later in the session,” two analysts from ING Bank noted.

By Shilpa Sharma

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