Brent slides as US eases some sanctions on Iranian oil

The front-month ICE Brent contract has declined by $1.93/bbl on the day, to trade at $77.36/bbl at 09.00 GMT.

IMAGE: Oil pumpjacks. Getty Images

Upward pressure:

While there are no specific upward pressures acting on Brent’s price today, market analysts will keep an eye on developments in Lebanon.

The Israel Defense Forces (IDF) struck targets in southern Lebanon over the weekend, breaching a key provision of the US-Iran peace deal signed in France last week.

Any further regional hostilities risk reigniting market anxiety, as they raise the possibility of Iran once again closing the Strait of Hormuz.

Downward pressure:

Brent crude’s price came under downward pressure after the US Department of Treasury (DoT) waived some sanctions linked to Iranian oil sale.

The temporary 60-day general license will authorise the production, delivery and sale of Iranian crude and petrochemical products to global markets, the treasury department said.

Oil “weakened as the US announced a temporary sanctions waiver on Iranian oil exports,” two analysts from ING Bank said.

The license will allow Iranian-origin oil sale made by US dollar-denominated funds, according to the treasury department.

Meanwhile, the gradual increase in oil flows through the Strait of Hormuz and positive outcomes from yesterday’s US-Iran talks in Switzerland have put downward pressure on prices today.

“Iran had already started ramping up exports following the lifting of the US blockade. This sanctions waiver will open more markets for Iran to sell its oil, including the US,” ING Bank’s analysts added.

By Aparupa Mazumder

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