Brent vaults above $115/bbl as Iran targets Gulf energy infrastructure

The front-month ICE Brent contract has risen by $12.66/bbl on the day, to trade at $115.55/bbl at 09.00 GMT.

IMAGE: Oil storage tanks. Getty Images

Upward pressure:

Brent crude’s price has surged by more than $12/bbl after Iran targeted energy infrastructure across the Middle East in response to Israeli strikes on Iran’s South Pars gas field yesterday.

Key Gulf energy producers, including Saudi Arabia, Kuwait, Iraq and Qatar, continue to face Iranian strikes, with Saudi Aramco’s Samref refinery at the Red Sea port of Yanbu among the main targets in missile attacks earlier today.

“This raises fears of a more prolonged disruption to Persian Gulf energy supplies,” two analysts from ING Bank said.

With no signs of de-escalation, Brent is likely to rally this week, according to market analysts.

“The UAE’s daily oil output is down by 1.8mb/d [1.8 million b/d] since February. Kuwait’s oil production has dropped to about 1.3m b/d [1.3 million b/d] from 2.6mb/d [2.6 million b/d] last month,” ANZ Bank’s senior commodity strategist Daniel Hynes said, citing Bloomberg data.

Downward pressure:

Brent’s price has come under some downward pressure after the US Energy Information Administration (EIA) reported a sizeable build in US crude stocks.

Commercial US crude oil inventories increased by 6.2 million bbls to 449 million bbls in the week ending 13 March, according to data from the EIA.

A build in US crude stocks typically indicates lower demand for oil and can put some downward pressure on Brent's price.

By Aparupa Mazumder

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