Brent to end week above $95/bbl mark

The front-month ICE Brent contract has slumped by $0.80/bbl on the day, to trade at $95.12/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Brent crude’s price is poised to end the week higher than it began, amid escalating hostilities between the US and Iran in the Middle East.

Renewed drone strikes have driven commercial fleets to detour around the Strait of Hormuz, increasing voyage times.

Earlier this week, multiple unmanned aerial vehicles (UAVs) struck two commercial vessels attempting to transit the region – one belonging to Saudi Arabia’s national shipping company Bahri, and another sailing under a South Korean flag.

Riyadh’s Ministry of Foreign Affairs has accused Tehran of the attack on oil tanker Sidr, which killed two sailors.

“Oil prices remain elevated, with ICE Brent holding above $95/bbl, amid a pickup in hostilities between the US and Iran this week,” two analysts from ING Bank noted.

Downward pressure:

Crude oil exports from Iraq have increased to about 2.34 million b/d in August, from 1.35 million bp/d in July, Reuters reported, citing two Iraqi energy officials. The news has put some downward pressure on Brent.

Brent crude’s price rally “may lose traction if Hormuz shipments keep moving smoothly,” ING Bank’s analysts said.

Any uptick in the number of vessels transiting the Strait of Hormuz is expected to slash oil prices, according to market analysts.

“If Strait of Hormuz flows continue uninterrupted despite the latest escalation, the upward pressure on prices may begin to fade,” ING Bank’s analysts said.

By Aparupa Mazumder

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