Brent gains as market remains on edge due to geopolitical conflicts

The front-month ICE Brent contract gained $1.04/bbl on the day, to trade at $87.41/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Brent futures have risen due to ongoing geopolitical tensions in the Middle East.

“The geopolitical backdrop is still very fraught with so many risks at the moment, so clearly we're going to see a lot of volatility until there's a lot more clarity around it," according to ANZ analysts.

The possibility of supply disruptions looms as sanctions on Iranian oil remain a key concern, market analysts said. The US already has oil sanctions in place against Iran.

Lawmakers in Washington are “considering a bill called the Iran-China Energy Sanctions Act,” ING Bank’s head of commodities strategy Warren Patterson said. This bill aims to restrict Iranian oil flows to China.

Heightened tensions in eastern Europe following the US House of Representatives vote in favour of a $61 billion aid package for Ukraine, which will be used to arm its military, has added uncertainty to the global oil market and contributed to supply concerns.

“The Kremlin's response to the promise of new aid to the country Russia is attempting to conquer (Ukraine) could heighten tensions further,” SPI Asset Management’s managing partner Stephen Innes commented.

Downward pressure:

A stronger-than-expected build in US crude inventories has exerted downward pressure on Brent’s price this week.

Commercial crude oil inventories in the US rose by 2.74 million bbls to 459.99 million bbls on 12 April - highest level since June last year, according to the US Energy Information Administration (EIA).

Market analysts are now awaiting the release of US gross domestic product (GDP) figures and March's personal consumption expenditure data, recognised by the Fed as an inflation indicator. Both datasets will be crucial for evaluating the Fed’s path of monetary policy, which could impact oil demand in the country.

By Tuhin Roy

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