Brent moves lower as demand concerns escalate

The front-month ICE Brent contract has moved $2.15/bbl lower on the day, to trade at $64.60/bbl at 09.00 GMT.

IMAGE: Flags of the US and China on a cracked wall depicting trade tensions. Getty Images

Upward pressure:

Renewed pressure on Iran-backed armed groups has supported Brent’s price.

President Donald Trump-led US administration has sanctioned three vessels and three shipping companies for allegedly supporting Yemen-based Houthi militants.

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned the vessels for delivering liquefied petroleum gas (LPG) and gas oil to the Houthi-controlled Ras Isa port.

In Iran’s port city of Bandar Abbas, a huge blast caused an explosion of chemical materials that killed at least 70 people and injured more than 1,200, Reuters cited the country’s state-owned media report on Monday. The port is Iran’s biggest container hub, according to the report.

Downward pressure:

Brent futures have plunged due to multiple factors, all ultimately pointing to one key concern: weakening demand.

Any quick resolution to the trade war between the US and China now seems a little far off, according to market analysts. This outlook has renewed demand growth concerns for commodities like oil.

The potential increase in supply from the OPEC+ alliance is adding further downward pressure on crude oil. “Downside risks for oil prices continue to persist as OPEC+ plans to revive production in its upcoming meeting scheduled for next week,” two analysts from ING Bank noted.

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online