Brent jumps on worsening geopolitical crises, set for big weekly gain
Brent futures are up sharply on the day as Israel has continued bombing southern Gaza after rejecting a ceasefire offer earlier this week.
PHOTO: Oil refinery and pipeline in the desert during sunset. Getty Images
Brent futures had declined last week on talks of a ceasefire between Israel and Hamas, and this week’s 6% gains reflect a reversal of those hopes, according to UBS analyst Giovanni Staunovo.
“Tensions in the region have not gone away,” he says.
Meanwhile, Ukraine on Friday launched fresh drone attacks against Russian oil refineries. The events unfolding in the Middle East and Russia have made oil traders brace for potentially lengthy supply disruptions, leading to the swing in commodity futures.
Declining oil stocks are also helping amplify Brent’s gains. US crude stockpiles declined by 20 million bbls European stocks were down 5 million bbls in January, Staunovo notes.
“We still see some more modest upside from here, driven by ongoing healthy demand and lower OPEC+ production and slowing supply growth in non-OPEC+ countries,” he says.
UBS is forecasting Brent prices at $84/bbl by the end of March and $86/bbl by the end of June.
Brent's upward trend has sent VLSFO prices up in major ports around the world over the last week.
VLSFO price gains since last Friday:
- Houston ($32/mt), Fujairah ($25/mt), Gibraltar ($21/mt), Rotterdam ($16/mt) and Singapore ($12/mt)
By Debarati Bhattacharjee
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