Brent climbs as Middle East tensions fuel supply concerns

The front-month ICE Brent contract has gained by $2.58/bbl on the day from Friday, to trade at $105.64/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Middle East tensions continue to support Brent crude futures, with escalating security risks threatening oil supplies and shipping routes.

The Iran-aligned Houthis claimed responsibility for a Saturday strike on Riyadh’s international airport, which killed 13 people and injured more than 300. Meanwhile, further attacks on tankers transiting the Strait of Hormuz have been reported this month, threatening to undermine the recovery in Middle East crude exports seen in September, Reuters reported.

“Crude oil prices pushed higher… amid mounting risks to supply. Attacks on tankers transiting the Strait of Hormuz continue to rise, with at least 17 attacks since 28 September,” said ANZ Bank’s senior commodity strategist Daniel Hynes.

“This threatens supply flows in the Red Sea, where the Houthis have tried to block Saudi tankers from operating. The attacks are applying upward pressure on freight costs,” Hynes added.

Downward pressure:

On Friday, Trump said Russia would immediately supply more than 2.25 million bbls of diesel to US and global markets, with additional volumes to follow later, Reuters reported.

“It would appear that the move in oil today is probably less to do with developments in the Middle East and more to do with Russia,” two analysts from ING Bank noted.

Trump also unexpectedly announced on Sunday that Ukraine and Russia had agreed to an energy ceasefire. However, Ukrainian President Volodymyr Zelenskiy said he was still awaiting details of the agreement, while Russia made no comment, Reuters added.

“Trump announces Ukraine energy ceasefire with Russia, surprising Zelensky,” commented Vanda Insights founder Vandana Hari.

By Tuhin Roy

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