Brent gains as supply concerns intensify
The front-month ICE Brent contract moved $1.16/bbl higher on the day, to trade at $81.05/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
Brent’s price surpassed $80/bbl on the back of intensifying supply concerns from different parts of the world.
On Sunday, Iran-aligned Hezbollah armed group launched over 150 drones and missiles toward Israel, the Israel Defense Forces (IDF) said. This news subsided hopes of a US-mediated ceasefire deal in the Gaza Strip and added upward pressure on Brent’s price this week.
“Markets remain on edge as skirmishes between Israel and Hezbollah intensify,” ANZ Bank’s senior commodity strategist Daniel Hynes said.
Supply disruption concerns have also intensified in eastern Europe, with Russia and Ukraine now specifically targeting energy facilities in the bordering areas.
Brent’s price gained more support following reports that key oilfields in eastern Libya were shut down due to growing unrest over control of the country’s central bank, Reuters reported. However, Libya’s state-owned oil company National Oil Corporation (NOC), which oversees the country's oil resources, has yet to confirm the shutdown.
“The risk of disruption to actual barrels of oil became real after Libya’s eastern government said it will halt all oil production and exports,” Hynes added.
Downward pressure:
A decline in China’s demand growth in recent weeks has continued to put downward pressure on Brent’s price this week.
Oil consumption in the world’s second-largest consumer dropped by 8% year-on-year to 13.55 million b/d, China’s General Administration of Customs (GACC) reported.
In the US, worries about economic growth emerged following the country's employment report by the US Bureau of Labor Statistics (BLS). US employers added 818,000 fewer jobs in the 12 months leading up to March 2024 than initially estimated. This news has capped some of Brent’s price gains.
A slowdown in the US economy could have a cascading impact on oil demand growth, according to market analysts. Traders are now waiting for tomorrow's release of official US oil inventory data to gain more clarity about the country's oil demand growth.
By Aparupa Mazumder
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