Geopolitical disputes help Brent gain momentum

The front-month ICE Brent contract has gained by $1.38/bbl on the day, to trade at $71.30/bbl at 09.00 GMT.

PHOTO: Crude oil barrels. Getty Images

Upward pressure:

Geopolitical tensions brewing in the Middle East have once again pushed Brent crude’s price above the $70/bbl mark.

Earlier this week, the Donald Trump-led US administration launched a major military operation against the Yemen-based Houthi militants, in response to the ongoing maritime attacks that have disrupted vessel movements in the crucial Red Sea shipping corridor.

The US President has further warned that Iran would be held accountable for any attacks carried out by the rebel group. “The US continues to pile further pressure on Iran, with President Trump pressuring it to rein in support for Yemen’s Houthis rebels,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Brent’s price also found support from declining US gasoline and distillate stockpiles that helped offset fears of weak demand growth. “US gasoline inventories have fallen for three consecutive weeks. They’re now the lowest since early January,” two analysts from ING Bank said.

Downward pressure:

Brent’s price felt some downward pressure after the US Energy Information Administration (EIA) reported a small rise in US crude stocks.

Commercial US crude oil inventories increased by 1.7 million bbls to touch 437 million bbls for the week ending 14 March, according to data from the EIA.

A buildup in inventories typically signals weaker oil demand, which can put downward pressure on Brent’s price.

By Aparupa Mazumder

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