Brent slips as Iran risk premium fades

The front-month ICE Brent contract has declined by $0.43/bbl on the day, to trade at $64.08/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Brent’s price this week has been driven primarily by heightened geopolitical risks and concerns over crude oil supply disruptions, market analysts said.

Kazakh oil shipments from the Caspian Pipeline Consortium (CPC) terminal are expected to come under “significant pressure” this month, according to two analysts from ING Bank.

Exports are expected to come in between 800,000 b/d – 900,000 b/d, or around 45% below initial expectations, Bloomberg reports.

“The drop is due to maintenance and damage caused by Ukrainian drones, while weather has also been an issue,” ING Bank’s analysts said.

Downward pressure:

Brent crude has faced downward pressure on easing fears of an imminent US intervention in Iran’s ongoing unrest.

Yesterday, US President Donald Trump told reporters that “killing in Iran is stopping”, adding that the US administration would be very upset if the Islamic Republic continued its crackdown on protestors.

“This reduced the likelihood of US intervention and possible disruptions to Iranian oil production and nearby shipping lanes,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Any escalation with Tehran will further raise concerns about potential disruptions to oil flows through the Strait of Hormuz, according to market analysts.

“The sell-off came as the US avoided taking immediate action against Iran amid ongoing protests in the country,” ING Bank’s analysts said.

By Aparupa Mazumder

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