Brent inches up on supply concerns

The front-month ICE Brent contract has gained $0.15/bbl on the day, to trade at $69.84/bbl at 09.00 GMT.

PHOTO: Black oil barrels. Getty Images

Upward pressure:

Brent’s price inched up on the back of supply-related concerns after US Energy Secretary Chris Wright said that the Donald Trump-led US government is prepared to tighten sanctions on Iranian oil production, Bloomberg reports.

Besides, the US Energy Information Administration (EIA) has maintained its forecast for Brent’s price this year. It projects the Brent spot price to average around $74/bbl in 2025 amid decreasing crude oil production in Iran and Venezuela in the first half of this year.

Stricter sanctions on Iran and Venezuela’s oil and energy sectors will likely dent global oil production growth in the first and second quarters of 2025, the US energy agency said.

This news has supported Brent’s price as the sanctions are expected to bridge the gap between oil production and consumption in 2025, according to market analysts.

The EIA report “showed that surplus expectations for the market over 2025 and 2026 were reduced thanks to sanctions,” two analysts from ING Bank remarked. “The EIA now expects the global market to be in a 100k b/d [100,000 b/d] surplus in 2025, compared to a previous forecast for a surplus of 500k b/d [500,000 b/d],” they added.

Downward pressure:

Brent’s price gains were limited by a rise in US crude stocks, reported by the American Petroleum Institute (API).

Crude oil inventories in the US rose by 4.2 million bbls in the week that ended 7 March, the API estimated, while market participants were expecting a smaller build of 2.1 million bbls in the week.

“Numbers overnight from the American Petroleum Institute (API) were fairly bearish,” ING Bank’s analysts said. A rise in US crude stocks indicates weakness in oil demand, which can put downward pressure on Brent crude’s price.

Oil’s gains were also capped following media reports that Ukraine is ready to accept a US-brokered 30-day ceasefire deal with Russia. The news has raised expectations that Moscow’s crude oil may “start flowing freely on the international market,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

However, there is still uncertainty over Russia’s stance on the proposed agreement.

By Aparupa Mazumder

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