Brent rises as supply-side concerns take centre stage
The front-month ICE Brent contract has gained by $1.99/bbl on the day, to trade at $69.40/bbl at 09.00 GMT.
IMAGE: Oil storage tanks. Getty Images
Upward pressure:
Brent crude has moved closer to $70/bbl with the Iran risk premium resurfacing in the global oil market.
The US Department of Transportation has issued an advisory for all US-flagged commercial vessels to steer clear of Iranian waters.
This development has brought back fears of a potential US military action in the oil-rich region, according to market analysts.
“This raised concerns that talks between the US and Iran are breaking down and thus lifting the risk of military action, which could disrupt oil supplies in the region,” ANZ Bank’s senior commodity strategist Daniel Hynes noted.
Downward pressure:
The total number of rigs drilling for crude oil in the US rose by one to 412 units last week, according to Baker Hughes.
The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.
In an oversupplied market, any signal of increased future supply can put downward pressure on Brent’s price.
By Aparupa Mazumder
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