Brent tops $80/bbl as global supply concerns mount
The front-month ICE Brent contract gained $1.13/bbl on the day from Friday, to trade at $80.25/bbl at 09.00 GMT.
PHOTO: Oil barrels. Getty Images
Upward pressure:
Mounting geopolitical tensions in the Middle East remained in focus over the weekend.
Iran and its regional proxies reportedly vowed to retaliate with strikes on Israel, after the assassinations of Hamas leader Ismail Haniyeh and Hezbollah commander Fuad Shukr late last month.
Israel’s military operations in Gaza intensified on Saturday, Reuters reports. The Israel Defense Forces (IDF) struck a school compound, killing 90 civilians, the report adds. “A fair amount of uncertainty over Iran’s response to last month’s assassination of a top leader of Hamas in Tehran has been supportive of the risk premium for crude oil,” two analysts from ING Bank said.
Oil investors are also keeping a close watch on developments in the Russia-Ukraine war. Earlier today, Moscow ordered evacuation of civilians from areas closer to Ukraine after Kyiv ramped up military activity near the Russia-Ukraine border, according to a Reuters report.
“Traders remain mindful of simmering tensions in the Middle East,” ANZ Bank’s senior commodity strategist Daniel Hynes said. “Geopolitical risks remain elevated, with Ukraine’s incursions into Russia putting at risk energy supply in Europe,” he added.
Oil market participants currently await monthly oil market reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) to get a better picture of the current supply and demand growth factors influencing oil prices.
Downward pressure:
Reports that the US, Qatar and Egypt are demanding a fresh round of ceasefire talks between Israel and Iran-aligned Hamas armed group has added some downward pressure on Brent’s price this morning.
A series of weak economic data from the US has capped Brent’s price rise in recent days. Fears of a looming recession in the world’s largest oil-consuming nation have raised concerns about the health of the US and global economy, according to market analysts.
The global oil market is likely to get fresh cues about oil demand growth in the US after the July Consumer Price Index (CPI), a key indicator of inflation growth in the country, is released later this week.
“Now, we’re [market analysts] staring down the barrel of a CPI report,” SPI Asset Management’s managing partner Stephen Innes added.
By Aparupa Mazumder
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