Brent inches lower on ceasefire talks in Cairo
The front-month ICE Brent contract shed $0.26/bbl on the day, to trade at $88.69/bbl at 09.00 GMT.
PHOTO: Oil pump jacks. Getty Images
Upward pressure:
Concerns about global supply disruptions due to lingering geopolitical tensions and recurring missile attacks on commercial ships in the Red Sea have supported Brent’s price in recent weeks.
In the latest series of missile attacks, Iran-aligned Houthi forces targeted US Navy’s guided missile destroyers USS Laboon and USS Philippine Sea patrolling the Red Sea yesterday, according to the US Central Command (CENTCOM).
Oil market analysts have highlighted earlier that Iran’s involvement in these attacks can prompt Washington to enforce stricter sanctions on Iranian oil and push Brent’s prices higher.
“US President Joe Biden is under pressure to increase efforts to crack down on crude exports from Iran,” commented ANZ Bank’s senior commodity strategist Daniel Hynes.
Downward pressure:
The latest round of ceasefire talks between the Israeli Defense Forces (IDF) and Hamas militants in Cairo, Egypt, has been somewhat constructive, analysts said. This news has put some downward pressure on Brent futures.
“Israel has significantly softened its stance on the conditions for a ceasefire and hostage deal with Hamas, prompting hope for a breakthrough,” VANDA Insight’s founder and analyst Vandana Hari said.
US Secretary of State Antony Blinken has also ramped up efforts to “secure a truce,” Hynes said.
Oil market participants have now shifted their focus on the upcoming US Federal Reserve’s (Fed) two-day policy meeting that will commence later today. The US central bank’s Federal Open Market Committee (FOMC) will discuss the timeline for interest rate cuts this year.
Higher interest rates can reduce oil demand by increasing the cost of commodities like oil for non-dollar holders.
“The US economy still consistently growing just below trend growth could force [Fed chairman Jerome] Powell to make a hawkish pivot,” Saxo Bank’s strategy team wrote in a note.
By Aparupa Mazumder
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