Brent edges up on Middle East crossfire

The front-month ICE Brent contract has gained by $0.15/bbl on the day, to trade at $77.08/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Oil market participants remain on edge as the Israel-Iran conflict has entered its second week, with both countries continuing to exchange airstrikes on critical infrastructures.

Israel has struck more of Iran’s nuclear sites and warned its attacks could bring down the Islamic Republic’s government, according to media reports. The news has supported Brent crude’s upward move.

“Satellite images also show that Iran is racing to get its oil out, filling storage tanks and sending as much onto the global market as it can,” ANZ Bank’s senior commodity analyst Daniel Hynes remarked.

Market analysts fear that Iran may retaliate by disrupting oil flows through critical chokepoints including the Strait of Hormuz and the Bab al-Mandab Strait in the Red Sea.

“This could trigger action by Israel’s allies, including stricter sanctions on Iran. Energy export infrastructure in Iran and other regional states could be targeted,” Hynes added.

Downward pressure:

US President Donald Trump said he would take up to two weeks to decide on any potential US military action against Iran, US press secretary Karoline Leavitt said yesterday.

There is a “substantial chance” of negotiations with Tehran, Leavitt quoted Trump as saying. This news has eased some supply concerns in the market, as it has re-opened window for a US-Iran nuclear deal.

This news has capped some of Brent’s price gains, “reducing speculation that the US is planning to imminently join Israel in attacking Iran’s nuclear facilities,” Hynes added.

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online