Brent under pressure as China’s property crisis eclipses Middle East conflict

Front-month ICE Brent has declined by $1.14/bbl on the day, to $82.34/bbl at 09.00 GMT.

PHOTO: A tanker passing through the Suez Canal. Getty Images

Upward pressure:

Concerns about supply disruptions in the oil market amidst the Middle East conflict and ongoing Houthi attacks on commercial ships in the Red Sea have contributed to Brent's recent price rise.

Brent could see potential upside if Middle East tensions escalate and impact oil production in the region, ING’s head of commodity strategy, Warren Patterson writes in a report. He adds that oil prices could also rise if there is a disruption in the Strait of Hormuz, which sees 20 million b/d pass through.

Downward pressure:

The US National Security Council’s coordinator for strategic communications, John Kirby said that the US does not wish to exacerbate the Middle East crisis. “We are not looking for a war with Iran.  We are not looking to escalate the tensions any more than they already have been escalating.,” Kirby told reporters at a White House briefing.

A Hong Kong court has ordered Chinese property giant Evergrande to liquidate, deepening China's property crisis. It is possible that Brent's upside gains could be limited by the real estate debt crisis weighing on China's economy and reducing its appetite for crude oil in the coming months.

Data from OPEC+ members show oil exports from members that pledged to cut output are "broadly steady", Bloomberg reported citing Kpler data. Russia, Kazakhstan and Iraq have reduced their output only marginally, the report added.

By Konica Bhatt

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