Brent surged amid heightened geopolitical tensions

The front-month ICE Brent contract gained $0.90/bbl on the day, to trade at $89.12/bbl at 09.00 GMT.

PHOTO: An oil pump jack. Getty Images

Upward pressure:

Brent futures gained this week due to escalating geopolitical tensions in the Middle East.

Risks related to oil security grew after Israel ramped up airstrikes on southern Gaza’s Rafah region yesterday, Reuters reported.

A retaliation from Iran and its proxies will not be too surprising now, according to analysts.

Brent's price gained additional support from the US treasury secretary Janet Yellen's latest comments. Yellen told Reuters that the “weak” first quarter US gross domestic product (GDP) data may be revised higher. "The U.S. economy continues to perform very, very well," Reuters quoted Yellen as saying.

Downward pressure:

Brent's price felt some downward pressure as US economic data disappointed the oil market.

The US GDP recorded a growth rate of 1.6% in the first quarter of this year, while analysts expected a growth of 2.4%, Reuters reported.

The data led to expectations in the market that the US Federal Reserve (Fed) would not cut interest rates anytime soon. But Yellen's remarks waned those concerns. Higher interest rates in the US can potentially dampen demand for dollar-denominated commodities like oil.

Brent’s prices dropped in early morning trade as “US GDP data prompted stagflation concerns,” said Saxo Bank’s head of FX strategy Charu Chanana.

By Aparupa Mazumder

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