Brent gains on concerns over lower OPEC+ exports

The front-month ICE Brent contract has gained $1.04/bbl on the day from Friday, to trade at $85.20/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Brent futures gained upward momentum due to concerns about tight global supply amid a slowdown in exports from Saudi Arabia and Russia. Earlier this month, both countries pledged to extend their supply cuts into September.

Saudi Arabia pledged to extend its voluntary production cuts of 1 million b/d into September, while Russia announced to slash its output by 300,000 b/d. Several market analysts expect oil exports from OPEC+ to come down this month.

Downward pressure:

Growing concerns about more interest rate hikes by the US Federal Reserve (Fed) kept a lid on the Brent price's gain. Higher interest rates make the greenback stronger against other currencies, which in turn could dampen demand growth for dollar-denominated commodities like crude oil.

Fed officials are expected to discuss inflation and deliver necessary policy changes at the next Federal Open Market Committee (FOMC) meeting on 19 and 20 September.

“Fed Chair [Jerome] Powell’s speech will reiterate that more rate hikes might be needed and that rates should stay higher for longer,” OANDA’s senior market analyst Ed Moya said.

By Aparupa Mazuder

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