Brent gains amid growing heat between Russia and its European neighbours

The front-month ICE Brent contract has gained by $0.73/bbl on the day from Friday, to trade at $61.10/bbl at 09.00 GMT.

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Upward pressure:

London has intensified pressure on Russian crude oil exports with its latest bout of sanctions. This news has supported Brent crude’s price over the weekend.

The UK has sanctioned Rosneft and Lukoil – two of Russia's largest oil producers.

The companies are “Russia’s biggest oil producers,” remarked Daniel Hynes, ANZ Bank’s senior commodity strategist, adding that the UK has also targeted “two Chinese energy firms and Indian refiner Nayara Energy.”

Downward pressure:

Brent crude has felt some downward pressure today amid growing fears of a potential supply glut, as OPEC+ continues to boost output while unwinding its production cuts.

The International Energy Agency (IEA) has projected that next year’s surplus “could be as high as 4mb/d [4 million b/d],” Hyne said. “That is up roughly 18% from last month’s [September] estimate,” he added.

Meanwhile, escalating US-China trade tensions have further stoked concerns about weaker energy demand.

“The outlook for demand is complicated by the on-again off-again trade tensions between the US and China,” Hynes further added.

By Aparupa Mazumder

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