Brent inches up as market continues to price in some supply concerns
The front-month ICE Brent contract has gained $0.16/bbl on the day, to trade at $74.25/bbl at 09.00 GMT.
PHOTO: Oil pumpjacks. Getty Images
Upward pressure:
Brent's price inched up amid uncertainties about further geopolitical developments in the Middle East.
Oil market traders and analysts are currently on the hook as Israel ramps up its plans to counterstrike Iran’s military facilities.
“The country [Israel] is free to act how it chooses after more than a year battling Iranian proxy groups and fending off two direct long-range attacks from the [Iran] Islamic Republic,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.
On the supply front, Brent’s price felt some upward thrust after the International Energy Agency (IEA) reported that global oil supply plunged by 640,000 b/d in September to 102.8 million b/d, primarily caused by political disputes in Libya and field maintenance work in Kazakhstan and Norway.
The report comes one day after OPEC’s monthly oil market report. OPEC's report stated that the 12 core members of the group produced an average of 26.04 million b/d of crude oil in September, about 604,000 b/d lower than their combined production in August.
“For now, oil exports from Iran and neighboring countries are unaffected but the market remains on tenterhooks, awaiting the next developments in the crisis,” Price Futures Group’s senior market analyst Phil Flynn said.
Downward pressure:
Brent’s price shed the previous week’s gains following reports, which suggested that Israel will not target Tehran’s oil and nuclear facilities.
An exclusive report by The Washington Post revealed that Israeli Prime Minister Benjamin Netanyahu’s administration is willing to strike Tehran’s military resources instead.
The news has eased risk premiums and moved Brent’s price lower, according to market analysts. “The [Washington Post] report eased concerns that oil supply would be disrupted, resulting in the diminishing geopolitical risk premium,” Hynes said.
Brent’s price felt more downward pressure after OPEC reduced its world oil demand growth forecast to 1.9 million b/d, with total consumption averaging 104.1 million b/d in 2024, about 106,000 b/d lower than its earlier projection.
“Oil prices dropped after OPEC cut its 2024 demand forecast for the third consecutive time, effectively conceding that China’s economic slowdown and structural shifts, like the rise of electric vehicles, could be sounding the death knell for any more super cycles,” SPI Asset Management’s managing partner Stephen Innes remarked.
By Aparupa Mazumder
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