Brent gains as US-Iran tensions resurface

The front-month ICE Brent contract has gained by $1.12/bbl on the day, to trade at $100.30/bbl at 09.00 GMT.

IMAGE: Oil storage tanks. Getty Images

Upward pressure:

Brent futures are poised to end the week above the $100/bbl mark amid growing tensions between the US and Iran.

Iran's military has accused Washington of violating the ceasefire agreement by targeting two Iran-linked vessels in the Strait, as well as civilian areas yesterday.

“Oil prices are likely to remain highly headline‑driven, with the recent escalation reinforcing the risk premium,” two analysts from ING Bank noted.

Meanwhile, the US Central Command (CENTCOM) said it intercepted Iranian missiles and responded with “self-defense” strikes as the US Navy’s guided-missile destroyers transited the Strait of Hormuz.

“With flows through the Strait of Hormuz unlikely to normalise quickly, markets remain exposed to further upside on any setbacks in diplomatic efforts,” ING Bank’s analysts said.

Downward pressure:

Brent’s price gains were capped by hopes of a ceasefire deal between Washington and Tehran that could eventually reopen the strategically crucial Strait of Hormuz to commercial vessel traffic.

Iran is considering a new one-page US proposal to end the conflict in the Middle East, the BBC reported earlier, prompting a steep sell-off in Brent’s price earlier this week.

“While tensions have escalated [today], the US has signalled no immediate intent to intensify the conflict and is reportedly still awaiting Iran’s response to a proposal to reopen the trade route,” ING Bank’s analysts noted.

By Aparupa Mazumder

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