Brent steady amid lack of Middle East resolution
The front-month ICE Brent contract has dropped by $0.96/bbl on the day from Thursday, to trade at $107.89/bbl at 09.00 GMT.
IMAGE: An oil pump jack. Getty Images
Upward pressure:
Brent crude has traded well above $100/bbl in recent days as the Strait of Hormuz remains largely closed to commercial vessel movement.
The global oil market has factored in the risk of missile and drone attacks - targeting commercial vessels, ports and energy infrastructure across the Middle East.
Earlier today, the UAE joined Bahrain’s proposal to the United Nations Security Council (UNSC) to take immediate action to reopen the Strait.
The UNSC is expected to vote this week on a resolution aimed at restoring commercial shipping around the Strait of Hormuz, Reuters reported.
“If Iran maintains effective control [of the Strait of Hormuz], the disruptions in the oil market will only persist,” ANZ Bank’s senior commodity strategist Daniel Hynes said.
Downward pressure:
Brent crude’s price gains were capped by a rise in US crude oil rig activity.
The total number of rigs drilling for crude oil in the US rose by two to 411 units last week, according to Baker Hughes.
The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.
Also putting downward pressure on oil prices, the US and Iran have received a plan to reach a ceasefire agreement and reopen the Strait of Hormuz, Reuters reported citing an unnamed source.
The framework has been put together by Pakistan and shared with Tehran and Washington, outlining a two-tier approach with an immediate ceasefire of hostilities, the report added.
“It’s unclear how quickly traffic in the Strait of Hormuz could resume if the US withdraws from the region” Hynes added.
By Aparupa Mazumder
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