Brent inches up on looming supply risks

The front-month ICE Brent contract has gained by $0.30/bbl on the day, to trade at $72.27/bbl at 09.00 GMT.

PHOTO: Oil flowing out of an oil barrel. Getty Images

Upward pressure:

Brent’s price gained support as Republican candidate Donald Trump’s re-election as the 47th US President has raised some supply concerns in the global oil market.

The oil market has priced in the implications of more sanctions on Iranian oil with Trump’s government back in Washington, with few analysts expecting extreme policies. “US President-elect Donald Trump is said to be considering an Iran-hawk for his Secretary of State,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Trump is expected to announce US Senator Marco Rubio as Secretary of State in his administration. Rubio is known for his firm stance on Iran and strong backing for Israel, Hynes said. “Macro Rubio has previously supported a maximum-pressure campaign against Iran and emboldened the Israeli response to threats from OPEC’s largest producer,” Hynes added.

Downward pressure:

Brent futures felt some downward pressure after OPEC cut oil demand growth projection in its latest monthly oil market report.

The Organization of the Petroleum Exporting Countries (OPEC) reduced its world oil demand growth forecast to 1.8 million b/d, about 107,000 b/d lower than its previous month's projection.

Total oil consumption in 2024 is expected to average 104 million b/d, OPEC said.

Lacklustre demand growth from China has also put downward pressure on Brent’s price, after the oil market was left disappointed with the Chinese government’s latest stimulus package.

“Oil prices will always be an unpredictable moving target, but looking ahead, the trend seems poised to head lower over the next year or two,” SPI Asset Management’s managing partner Stephen Innes said.

By Aparupa Mazumder

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