Brent moves higher after oil market rattled by supply concerns
The front-month ICE Brent contract moved $0.39/bbl higher on the day, to trade at $89.01/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
Brent futures surged close to $90/bbl, in response to news about a fire incident at Russia’s third-largest refining company Tatneft’s refinery.
The Mayor of Nizhnekamsk, Ramil Mullin, confirmed the news on his Telegram channel, stating that a Ukrainian drone attacked Tatneft’s Taneco refinery. The news has sparked fresh supply concerns in the global oil market.
“The [oil] market is becoming increasingly concerned; the risks have risen sharply,” ANZ Bank analysts noted.
The Taneco refinery complex, with a crude processing capacity of 340,000 b/d, had its primary unit, processing around 155,000 b/d, hit in the attack.
Additionally, tensions in the Middle East escalated after Iran accused Israel of an airstrike on its embassy in Damascus, resulting in the deaths of three Iranian military officials.
Saxo Bank’s APAC strategy team highlighted Iran's vow of retaliation, stating, “Iran vowed revenge on Israel for an airstrike on its embassy in Syria, which raises risks to oil supplies.”
The market is closely watching these developments ahead of OPEC’s Joint Ministerial Monitoring Committee (JMMC) meeting today to discuss output levels for the remainder of the year.
Downward pressure:
Members of the OPEC+ ministerial panel are unlikely to alter the group's output policy for the remainder of the year at today's meeting, Reuters reported citing five sources.
There's a risk that Brent futures could reverse recent gains if Saudi Arabia, OPEC's de-facto leader, and its allies, led by Russia, choose not to extend the current supply cuts of 2.2 million b/d beyond June.
“No recommendations to adjust production quotas are anticipated until the OPEC+ biannual meeting scheduled for June 1,” SPI Asset Management’s managing partner Stephen Innes stated.
By Tuhin Roy
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