Brent plunges following a fresh political turn in the US
The front-month ICE Brent contract lost $2.52/bbl on the day from Friday, to trade at $82.78/bbl at 09.00 GMT.
PHOTO: An oil pump jack. Getty Images
Upward pressure:
Brent crude found some support over the weekend as geopolitical hostilities in the Middle East stoked supply concerns in the global oil market.
Israel conducted an airstrike on Yemen on Saturday, following a Houthi drone attack on Tel Aviv last week, the Israel Defense Forces (IDF) said. This marks the first direct Israeli attack on Yemen and a clear escalation of the Israel-Hamas conflict.
Israel struck oil facilities in the Yemeni port of Al Hudaydah, which is operated by the Iran-aligned Houthis, according to several media reports.
In Canada, severe wildfires in Alberta continued put the oil sands production sites in the area at risk. “Canadian wildfires are again threatening 400kb/d [400,000 b/d] of oil production,” ANZ Bank’s senior commodity strategist Daniel Hynes said.
Russia's seaborne oil exports on a four-week average fell to 3.11 million b/d as of 14 July, down by about 600,000 bbls from their peak in April, according to a Bloomberg report. This has put some upward pressure on Brent’s price.
Downward pressure:
Brent lost the previous week’s gains as a fresh political turn of events in the US rattled the market.
On Sunday, US President Joe Biden formally exited the run for the upcoming presidential elections in the world’s largest oil consuming nation. Biden has endorsed Vice-President Kamala Harris as the Democrats' nominee.
Global markets will now “face a fresh puzzle” after Biden’s exit from the race against former President Donald Trump, SPI Asset Management’s managing partner Stephen Innes remarked. “It's as if the political game of chess has flipped its board, and investors are left picking up the pieces,” he added.
In China, signs of slow demand growth remain the biggest setback for crude oil prices, according to analysts. The country’s June crude throughput touched this year’s lowest level, with refineries processing about 58.32 million mt (14.19 million b/d) of crude, down 3.7% from June 2023.
“[Brent] crude’s jagged pullback over the past fortnight signals a tempering of oil demand sentiment,” VANDA Insights’ founder and analyst Vandana Hari said.
By Aparupa Mazumder
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