Brent plunges further on demand growth worries

The front-month ICE Brent contract has declined by $2.05/bbl on the day from Friday, to trade at $72.44/bbl at 09.00 GMT.

PHOTO: An oil pump jack. Getty Images

Upward pressure:

Brent’s price found some support as tensions in the Middle East heightened following Israel’s attack on Iran over the weekend.

“Over 100 fighter planes targeted only military targets across Iran,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Last week, the Israel Defense Forces (IDF) killed prominent Hamas and Hezbollah leaders, according to statements on its official social media platform X (formerly Twitter).

"Israel's targets [in Iran] for any retaliatory attack have been the focus, with concerns they would include nuclear facilities and energy infrastructure,” Hynes added.

Downward pressure:

Despite growing concerns about supply disruptions in the Middle East, weak oil demand growth forecasts, especially in the US and China, the world’s top oil consumers, have continued to put downward pressure on oil prices.

Commercial US crude oil inventories increased by 5.5 million bbls to touch 426 million bbls in the week ending 18 October, the US Energy Information Administration (EIA) reported.

Brent's price came under additional pressure as Israel's latest round of attack did not target Iran’s oil infrastructure directly, according to market analysts. It is expected to decline further if the geopolitical risk premium priced into oil markets eases in the coming days. 

“Crude oil futures plunged… as Israel’s much-anticipated airstrikes on Iran swerved away from critical oil infrastructure, deflating the geopolitical risk premium that’s been holding up oil prices,” SPI Asset Management’s managing partner Stephen Innes remarked.

By Aparupa Mazumder

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