Brent loses with global oil demand back in focus

The front-month ICE Brent contract has declined by $1.30/bbl on the day, to trade at $77.63/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Rising geopolitical tension in the Middle East has continued to keep the global oil market on edge and put some upward pressure on Brent’s price.

One year into the conflict, the Iran-aligned Hezbollah militant group reportedly fired over 135 missiles at Israel yesterday, the Israel Defense Forces (IDF) claimed. Meanwhile, the IDF troops have continued their ground operation in Southern Lebanon.

“A Hezbollah underground tunnel that crossed approx. 10 meters from Lebanon into Israeli territory was located and dismantled,” the IDF said on social media platform X (formerly Twitter).

Oil market analysts fear disruption to oil infrastructure in the broader region if Israel-Iran conflict escalates. “Concern remains as to whether Israel will attack Iran’s oil industry following the recent missile strikes,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

Brent’s recent rally has come to a halt as global demand concerns have once again taken center stage.

Crude oil inventories in the US surged by a massive 10.9 million bbls in the week that ended 4 October, according to the American Petroleum Institute (API) estimates. Oil market analysts expected a much smaller inventory gain of 1.95 million bbls during the week.

An increase in US crude stocks indicates lacklustre oil demand growth, which can put downward pressure on Brent’s price.

Brent’s price trailed lower after China’s National Development and Reforms Commission (NDRC), in a recent press conference, did to announce any new supportive measures for the country’s economic growth.

“Without policy support, an economic slowdown could keep China’s oil demand subdued in the short to medium term,” two analysts from ING Bank said.  

On the supply front, oil production in Libya reached 1.13 million b/d yesterday, its state-owned oil firm National Oil Corporation (NOC) said. The output growth comes days after oil producers resumed operations in the Sharara and El-feel oilfields, two of the largest Libyan oil production sites, NOC said.

The North African country has a production capacity of about 1.18 million b/d, according to OPEC.

By Aparupa Mazumder

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