Brent gains amid escalating geopolitical conflicts

The front-month ICE Brent contract has gained by $0.18/bbl on the day from Friday, to trade at $63.89/bbl at 09.00 GMT.

IMAGE: Oil storage tanks. Getty Images

Upward pressure:

Supply-side risks have added upward pressure on Brent crude over the weekend.

A major drone attack damaged an oil depot and a vessel in the Black Sea port of Novorossiysk in Russia last week. The strike supported Brent's upward movement.

“About 700kb/d [700,000 b/d] of Russian oil were shipped from there [Novorossiysk port] over the past two months,” according to ANZ Bank’s senior commodity strategist Daniel Hynes.

Meanwhile, loadings at the Novorossiysk port resumed on Sunday, Reuters reported.

Iran seized an oil tanker en route to Singapore in the strategically important Strait of Hormuz on Friday – marking the first major escalation of tensions since the Iran-Israel conflict earlier in June.

The Marshall Islands-flagged oil tanker Talara was seized by Iran in the Gulf of Oman after crossing the Strait of Hormuz from Ajman in the UAE, the Associated Press (AP) reported.

The oil market is “facing growing supply risks amid a variety of geopolitical risks,” two analysts from ING Bank remarked.

Downward pressure:

The total number of rigs drilling for crude oil in the US rose by three last week to 417 units, according to Baker Hughes.

The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.

Oversupply concerns, as OPEC+ members steadily restore production, have also capped Brent’s price gains.

The Saudi Arabia-led coalition agreed to collectively increase supply by 137,000 b/d in December – marking the eighth consecutive time it has planned to expedite production.

By Aparupa Mazumder

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