Brent torn between supply threats and de-escalation hopes
The front-month ICE Brent contract has inched $0.13/bbl lower on the day, to trade at $95.07/bbl at 09.00 GMT.
IMAGE: Oil barrels. Getty Images
Upward pressure:
Brent’s price has continued to trade above $95/bbl on the back of persistent tensions in the Middle East.
The US-Israel conflict with Iran is creating the “worst energy crisis ever faced by the world,” according to Fatih Birol, the executive director of the International Energy Agency (IEA).
"This is indeed the biggest crisis in history," Reuters quoted Birol as saying in a radio interview.
Yemen-based Houthi militants have threatened to close the Bab al-Mandab Strait on the Red Sea, if hostilities between the US and Iran continue.
The Bab al-Mandab Strait is another key route to ship Middle Eastern oil to global markets. Blocking the region will cut off alternative options for Saudi Arabia’s oil shipments, according to market analysts.
“The oil market right now feels like a stage where the props are on fire, the script says panic,” remarked SPI Asset Management managing partner Stephen Innes.
Downward pressure:
Hopes of a de-escalation in the Middle East has capped Brent’s price gains today, with markets still factoring in the possibility of further negotiations.
A fresh round of talks between the Washington and Tehran is planned for Wednesday in Islamabad, the BBC reported.
“The US is sending negotiators to Pakistan for peace talks today. Iran, however, has said it doesn’t plan to take part in talks,” two analysts from ING Bank said.
By Aparupa Mazumder
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