Brent sheds over $2/bbl on escalating demand concerns

The front-month ICE Brent contract has plunged $2.07/bbl on the day, to trade at $72.35/bbl at 09.00 GMT.

CONCEPT: Downward arrow depicting the slump in Brent's price. Getty Images

Upward pressure:

Brent’s price found some support from supply tightness concerns.

OPEC+ ministers will hold a call later today to discuss the need for compliance with the agreed oil production quotas, Bloomberg reported citing delegates from the alliance.

Kazakhstan has consistently come under pressure for exceeding its production limit during the ramp-up of its massive Tengiz oil field expansion.

“Some [OPEC+] members have been overproducing against their quotas and have been asked by de facto leader Saudi Arabia to make extra curbs as compensation,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

Downward pressure:

Brent’s price plunged after US President Donald Trump unleashed the highly anticipated tariffs on all global trade partners.

Trump announced that a minimum 10% tariff will be imposed on all countries exporting goods to the US from 5 April, in response to the high tariffs those nations already impose on American exports.

The announcement has sparked concerns of a major global trade war that could dampen demand for commodities like oil, according to market analysts. “The global trade order just got rewritten. The U.S. is weaponizing deficits — and the market will need to quickly sort the winners from the losers,” SPI Asset Management managing partner Stephen Innes said.

Brent’s price felt more downward pressure after the US Energy Information Administration (EIA) reported a massive 6.2 million-bbl surge in US crude oil inventories. A surge in inventories signals weaker oil demand, which can drag Brent's price down.

The weekly EIA inventory report was “fairly bearish,” two analysts from ING Bank noted.

By Aparupa Mazumder

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