Brent moves closer to $70/bbl on renewed supply concerns

The front-month ICE Brent contract has gained by $2.04/bbl on the day, to trade at $69.81/bbl at 09.00 GMT.

IMAGE: Flags of the US and Iran. Getty Images

Upward pressure:

Brent crude’s price has risen by more than $2/bbl on renewed supply disruption concerns from the Middle East.

US President Donald Trump has warned of possible military action against Iran, as Washington continues its push to end the OPEC producer’s nuclear ambitions, Reuters reported. A US naval group has arrived in the region, the report added.

“Oil markets continue to strengthen amid growing concern over a possible escalation between the US and Iran,” two analysts from ING Bank noted.

The escalation could potentially disrupt supply from the region, market analysts said. Iran produces about 3.2 million b/d of crude oil.

“President Trump threatened another attack on Iran, urging Tehran to negotiate a nuclear deal,” ANZ Bank’s senior commodity strategist Daniel Hynes said. “This raised the spectre of disruptions to its oil supply,” he added.

Downward pressure:

Kazakhstan’s Tengiz oilfield is expected to reach full production capacity this week, following an unplanned outage due to a fire. This news has capped some of Brent’s gains today.

In the US, the Federal Reserve (Fed) has decided to keep interest rates steady in the range of 3.50% to 3.75%, following three rate cuts in 2025.

The rate decision comes as the US dollar remains under pressure, trading close to a four-year low against major currencies and adding complexity to the Fed’s inflation outlook.

“Oil is the other inflation ghost that will not stay in the basement,” remarked SPI Asset Management managing partner Stephen Innes.

By Aparupa Mazumder

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