Brent sheds as market reacts to Fed’s cautious economic outlook for 2025

The front-month ICE Brent contract has moved $0.77/bbl lower on the day, to trade at $72.34/bbl at 09.00 GMT.

PHOTO: Crude oil barrels. Getty Images

Upward pressure:

Brent’s price has gained some support as market participants braced for news of further oil supply tightness.

In a move that could cut more supply from the global oil market, the G7 group of developed countries is considering stricter ways to strengthen the price cap on Russian crude oil, including an outright ban, Bloomberg reports.

Russia’s alleged ‘shadow fleet’ has circumvented the $60/bbl price cap set on its crude and oil products.

By assembling a shadow fleet of poorly maintained vessels that are used to circumvent sanctions meant to restrict the movement of Russian crude oil, Russia has been effectively trading outside the imposed price cap.

Downward pressure:

Brent's price lost momentum after the US dollar climbed to a two-year high on Thursday.

The dollar climbed higher after the US Federal Reserve hinted at a more cautious outlook for interest rate cuts in 2025, Reuters reports. A stronger dollar makes commodities like oil more expensive against other major currencies.

The commodities market crushed “after the Fed raised its dot plot and took interest rate cuts off the table for the foreseeable future,” Price Futures Group’s senior market analyst Phil Flynn said.

Brent’s price felt additional pressure due to growing concerns about China’s oil demand in 2025. Chinese officials recently met to discuss more economic stimulus to be introduced in the country next year. However, the news did not provide much support to oil, analysts said.

Chinese state-owned refiner Sinopec said in its annual energy outlook that China's crude oil imports could peak as soon as 2025 and the country's oil consumption would peak by 2027 as demand weakens and EV sales grow, Reuters reports.

“The [demand] growth rate is underwhelming for China from historical standards but at the same time, to achieve that rate consistently China is going to have to do a lot more on the stimulus front,” Flynn added.

By Aparupa Mazumder

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