Brent moves up on escalating geopolitical unrest

The front-month ICE Brent contract gained $1.94/bbl on the day, to trade at $79.23/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Brent futures moved up following the overnight airstrikes in Yemen conducted by the US and UK military forces, which targeted locations reportedly used by Iran-aligned Houthi militants.

“These strikes are in direct response to unprecedented Houthi attacks against international maritime vessels in the Red Sea,” said US President Joe Biden in a statement.

Brent’s prices also gained after Iran confirmed the seizure of an oil tanker in the Gulf of Oman that it claims to be US-affiliated. “This will be a worry for oil markets if we see incidents [oil tanker seizure] like this becoming more regular,” two analysts from ING Bank said.

The speculation about a potential larger regional conflict impacting oil supply in the Strait of Hormuz, a critical transit route for oil, has raised concern within the oil market.

“The Gulf of Oman is very near the Strait of Hormuz, a critical chokepoint for oil flows,” the analysts further added.

Downward pressure:

Brent futures felt some downward pressure after the US Energy Information Administration (EIA) reported a surprise build of 1.34 million bbls in US crude oil stocks.

The EIA also reported an increase in US distillate stocks, which include diesel and gasoil, for the seventh week. This suggests a lagging demand in the world’s largest oil-consuming country.

“The EIA report slowed the petroleum market momentum,” said Price Futures Group’s senior market analyst Phil Flynn.

By Aparupa Mazumder

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