Brent surpasses $70/bbl mark on potential US-Iran escalation

The front-month ICE Brent contract has gained by $3.93/bbl on the day, to trade at $71.54/bbl at 09.00 GMT.

IMAGE: Flags of the US and Iran. Getty Images

Upward pressure:

Brent crude’s price has gained by nearly $4/bbl as supply disruption concerns in the Middle East have come into the limelight once again.  

Senior US officials have said that, despite progress in the second round of negotiations in Geneva, Iran appears to be disregarding Washington’s demands, according to market analysts.

“While talks in Geneva between the US and Iran were constructive, US Vice President JD Vance said [in an interview with Fox News] that Iran is ignoring key US demands,” two analysts from ING Bank noted.

Meanwhile, Iranian military shut down the Strait of Hormuz yesterday, Reuters reported, citing Iranian state media.

It is still unclear if the vital transit is fully operational yet. About 20% of the global crude oil supply passes through the strait.

“For oil markets, the concern is clearly what action would mean not only for Iranian oil supply, but also broader Persian Gulf oil flows,” ING Bank’s analysts added.

Downward pressure:

While there are no significant downward pressures on Brent’s price at the moment, market analysts currently await US Energy Information Administration’s (EIA) report on US crude stocks build.

A build in US crude stocks can signal softer demand and may place downward pressure on oil prices.

The EIA data is delayed by a day due to Presidents’ Day holiday.

By Aparupa Mazumder

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