Brent gains as supply concerns rekindle in the market

The front-month ICE Brent contract gained $0.27/bbl on the day from Friday, to trade at $82.65/bbl at 09.00 GMT.

PHOTO: Oil pump jacks. Getty Images

Upward pressure:

Brent futures gained over the weekend due to heightened concerns about supply disruptions in the oil market after another crude oil tanker was hit by Houthi-launched missiles on Saturday.

Four ballistic anti-ship missiles were launched at a Panamanian-flagged and Denmark-owned vessel MT Pollux by Iran-aligned Houthi militants on 17 February, US CENTCOM said. The vessel was carrying crude oil from Russia to India.  

Moreover, geopolitical tensions in the Middle East have escalated after Israel launched another ground offensive in southern Gaza.

“These developments [in the Middle East] spurred modest gains in Brent and WTI prices as investors reacted to the heightened geopolitical risks,” said SPI Asset Management’s managing partner Stephen Innes.

Downward pressure:

Brent’s recent gains were partially capped after the International Energy Agency (IEA) lowered its outlook for global oil demand growth.

The IEA expects global oil demand to grow by 1.2 million b/d this year, in a heavy contrast to oil-producers group OPEC’s projection of a 2.2 million b/d growth.

The Paris-based agency also sees a balance in the oil market for the first quarter of 2024, despite voluntary production cuts by OPEC+.

“This outlook contrasts with the EIA's projection of a 100,000-bpd [b/d] drawdown from global oil supply in the first quarter,” said SPI Asset Management’s managing partner Stephen Innes.

By Aparupa Mazumder

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