Brent gains on oil supply concerns

The front-month ICE Brent contract has moved $1.53/bbl higher on the day, to trade at $76.72/bbl at 09.00 GMT.

PHOTO: Oil pump jacks pictured at dusk. Getty Images

Upward pressure:

Brent’s price has moved higher on the day due to growing supply-related concerns emerging from geopolitical risks in the Middle East and Europe.

Last week, US President Donald Trump vowed to take over the Gaza Strip, with plans to completely transform the war-torn West Bank enclave, where more than 47,000 civilians have been displaced over the last 16 months due to the Israel-Hamas conflict.

This announcement has raised concerns about the potential for another round of Red Sea disruptions among the international maritime sector, and supported Brent’s price gains, according to market analysts.

“Shipowners are growing uneasy, fearing that Trump’s suggestion of taking over Gaza could trigger a resurgence in Houthi attacks on commercial vessels,” SPI Asset Management managing partner Stephen Innes said.

Moreover, oil disruption concerns grew after a Politico report suggested that European countries are pushing for plans to seize Russia’s shadow fleet.

“Adding to the growing geopolitical risks was a report that the Trump administration has put its peace plan for Ukraine on hold to include Europe in negotiations,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

Brent’s price felt some downward pressure due to escalating trade tensions between China and the US.

Last week, China’s State Council’s Customs Tariff Committee introduced a 10% tariff on all Chinese crude oil imports from the US, which came into force yesterday, as a countermeasure to Washington’s imposition of a similar tariff on Chinese goods earlier this month.

Market analysts predict that this additional levy on crude oil could increase the cost of US cargoes, which may discourage Chinese refiners from purchasing them, ultimately dampening demand.

By Aparupa Mazumder

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