Brent nears $85/bbl as supply concerns grow

The front-month ICE Brent contract climbed $1.80/bbl on the day, to trade at $84.92/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Brent’s price moved higher as oil market participants await the outcome of the OPEC+'s output policy meeting on 2 June.

The conflict between Israel and Hamas worsened over the weekend, rekindling supply concerns in major oil-producing areas. Iran-backed Houthi militants also ramped up missile attacks in the Red Sea. Houthi forces launched five missiles in the Red Sea yesterday, three of which struck a bulk carrier, the US Central Command (CENTCOM) said.

Besides, tensions have reportedly increased in Gaza. “Israeli tanks have also reached the centre of Rafah [in southern Gaza] and clashes with Hamas forces have emerged,” said ANZ Bank’s senior commodity strategist Daniel Hynes. This “challenging backdrop” will make OPEC’s decision on supply cuts difficult, according to Hynes.

Downward pressure:

Demand-related concerns have put some downward pressure on Brent’s price, with market analysts still contemplating the effect of higher interest rates on oil prices.

The US Federal Reserve (Fed) does not seem too keen to cut interest rates anytime soon due to sticky inflation in the US, according to minutes from the central bank’s latest policy meeting.

In the US, weekly oil inventory data projected by the American Petroleum Institute (API) got delayed by a day due to the Memorial Day holiday on Monday.

By Aparupa Mazumder

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