Brent slumps amid renewed Gaza ceasefire talks

The front-month ICE Brent contract lost $0.91/bbl on the day from Friday, to trade at $79.34/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Escalating geopolitical conflicts in the Middle East and eastern Europe have provided risk premiums to commodities in recent weeks and put an upward pressure on Brent’s price.

Debris from a Ukrainian drone sparked a fire at an industrial warehouse in southwest Russia's Rostov region on Sunday, Reuters reported. The region has been prone to drone attacks in the past that led to fire incidents in oil refineries there.

In the Middle East, Iran-aligned Hezbollah armed group launched multiple missiles on Israel over the weekend, fuelling further conflict in the region.

Iran and its regional proxies “vowed to attack Israel to avenge the killings of Hamas and Hezbollah leaders last month,” VANDA Insights’ founder and analyst Vandana Hari said. Besides, Tehran appears to be holding back from participating in the latest round of ceasefire talks that began in Qatar last week, she further remarked.  

Downward pressure:

Renewed talks of a ceasefire agreement in the Gaza Strip have eased some oil supply concerns in the region and put downward pressure on Brent’s price.

Oil market analysts will keep a close eye on the US secretary of state Antony Blinken’s visit to Israel this week, where he is expected to “push for a Gaza ceasefire,” Hari said.

Concerns about weak oil demand growth in China have also built some downward pressure on Brent futures. China’s refinery activity remained sluggish in July due to a slowdown in demand, according to market analysts.

The US Federal Reserve’s (Fed) annual Jackson Hole Economic Symposium this week will gather central bank leaders in Wyoming, US. Oil market investors will closely watch Fed chairman Jerome Powell’s speech on Friday, which is expected to provide insights into the US interest rate policy ahead of the central bank's monetary policy meeting in September.

Market analysts’ focus remains on “Gaza peace talks, China demand softness and the upcoming Jackson Hole meeting,” analysts from Saxo Bank said in a note.

By Aparupa Mazumder

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