Brent sheds as supply concerns from Libya and Russia eases

The front-month ICE Brent contract lost $0.28/bbl on the day, to trade at $79.82/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

The escalating geopolitical tensions have been bolstering Brent futures gains, especially with recent reports of additional airstrikes by the US and UK military against Iran-aligned Houthis in Yemen.

Iran is “directly involved” in the ongoing attacks on commercial vessels by the Yemeni militants in the Red Sea, head of the US Navy’s 5th fleet Brad Cooper said to the Associated Press (AP).

The American Petroleum Institute (API) reported a substantial decline in the US crude stocks, indicating demand growth in one of the world’s largest oil consumers. This has added upward pressure on Brent prices.

Commercial US crude inventories declined by 6.7 million bbls in the week ended 19 January, according to the American Petroleum Institute (API).

Downward pressure:

Brent futures declined as supply concerns from Russia and Libya eased some.

Russia’s Ust-Luga port in the Baltic Sea continued crude oil shipment, despite Novatek’s fuel export terminal remaining shut due to a fire caused by a Ukrainian airstrike earlier this week. Oil terminals at the Russian port, including one for crude oil exports and two other refined product export terminals have remained functional since Tuesday, Reuters reported citing sources.

Meanwhile, the resumption of oil production in Libya is putting downward pressure on Brent’s prices, “offsetting geopolitical tensions and incidents in various regions,” SPI Asset Management’s managing partner Stephen Innes said.  

Libya’s largest oil field El-Sharara was shut for almost three weeks due to ongoing protests. “The restart of the operations came after the local governments agreed to meet most of the demands from protestors,” ING Bank’s analysts said.

By Aparupa Mazumder

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