Looming geopolitical risks cap Brent's losses

The front-month ICE Brent contract has held roughly steady, edging down by just $0.42/bbl on the day, to trade at $70.68/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure

Concerns around rising geopolitical tensions have helped to support Brent’s price in the past day.

Last week, US President Donald Trump told Fox Business Network that he had written to Iran urging it to “make a [nuclear] deal” with Washington or face the US “militarily.”

Ayatollah Khamenei, Iran’s supreme leader, called Trump's threats of military action against Iran "unwise", according to Iran's state-owned news outlet, IRNA. “Iran is able of dealing a reciprocal blow, and will definitely do that,” IRNA quoted him as saying.

Iran’s foreign ministry is currently reviewing the letter, IRNA added.

The US Department of Treasury has imposed sanctions on Iran's oil minister, Mohsen Paknejad, over his role in supervising Iranian oil exports.

"Most price projections were to the downside in the short term, but geopolitical tension could still cause supply disruptions," Daniel Hynes, senior commodity strategist at ANZ, wrote in a recent report.  

Downward pressure

Global oil demand remains at risk from trade and tariff wars, the International Energy Agency (IEA) highlighted in a report. The agency has forecast global oil supply to outpace demand by 600,000 b/d in 2025.

This supply surplus is projected to further rise to 1 million b/d, if the OPEC+ bloc "extends the unwinding of output cuts beyond April," the IEA added.

By Konica Bhatt

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