Brent rises after Iran halts cooperation with UN nuclear agency

The front-month ICE Brent contract has gained by $1.24/bbl on the day, to trade at $68.63/bbl at 09.00 GMT.

IMAGE: The 700 million bbls of oil stored in underground salt caverns in the US to be used in case of war or global crisis. Getty Images

Upward pressure:

Brent’s price has gained on renewed geopolitical tensions in the Middle East. Iran has suspended cooperation with the International Atomic Energy Agency (IAEA) – a United Nations' nuclear watchdog.

The news has sparked market speculation about a cold war-like standoff, with the US possibly intensifying oil sanctions on Tehran.

Additionally, the US has reached a trade deal with Vietnam and will impose 20% tariffs on some of the country’s exports.

“The risk-on tone triggered by the Vietnam trade deal helped boost sentiment across the energy complex,” said ANZ Bank’s senior commodity strategist Daniel Hynes.

The set tariff rate is much lower than previously decided, market analysts said.

“Brent crude oil rose… as investors priced in tentative optimism that more deals will be reached ahead of the 9 July deadline,” Hynes said.

Downward pressure:

Brent’s price gains were capped after the US Energy Information Administration (EIA) reported a surge in US crude stocks.

Commercial US crude oil inventories have surged by 3.8 million bbls to touch 419 million bbls for the week ending 27 June, according to data from the EIA.

“The increase was the largest in three months,” Hynes said.

An increase in US crude stockpiles generally signals weaker demand and can dampen Brent's price.

“The build was driven by a large decline in US crude oil exports,” two analysts from ING Bank said.

By Aparupa Mazumder

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