Brent sheds on supply glut fears

The front-month ICE Brent contract has declined by $0.39/bbl on the day, to trade at $68.41/bbl at 09.00 GMT.

IMAGE: Oil storage tanks. Getty Images

Upward pressure:

Oil market watchers are closely monitoring the escalating geopolitical tensions that could significantly disrupt global trade and cut a major chunk of Russian oil supply from the market.

Yesterday, US President Donald Trump renewed his threat to impose higher tariffs on imported goods from India, if New Delhi continues its Russian oil purchase, Reuters reports.

In response, the Indian government has dismissed Washington’s stance as “unjustified and unreasonable,” widening the rift between the two trade partners. These developments have provided some support to Brent, according to market analysts.

“India has become a major buyer of the Kremlin’s oil since the 2022 invasion of Ukraine,” said ANZ Bank’s senior commodity strategist Daniel Hynes. “Any disruption to those purchases would force Russia to find alternative buyers from an increasingly small group of allies,” he added.

Downward pressure:

Brent crude has continued to slide following OPEC’s latest announcement to accelerate its planned output hikes.

Over the weekend, eight members of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) have agreed to collectively increase their supply by 547,000 b/d in September, accelerating the group’s plan to boost crude production.

“This completes the unwinding of the 2.2mb/d [2.2 million b/d] production cuts that eight producers implemented last year to help stabilise the market,” Hynes claimed.

However, there was little clarity on the future of the production cuts introduced by the broader group two years ago, which still keeps 1.66 million b/d of crude oil offline.

By Aparupa Mazumder

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