Oil risk premium underpins Brent crude
The front-month ICE Brent contract has gained by $2.72/bbl on the day, to trade at $83.86/bbl at 09.00 GMT.
IMAGE: Getty Images
Upward pressure:
Brent crude’s price has remained elevated amid mounting risk of supply disruptions through the Strait of Hormuz – a critical chokepoint through which almost 20% of the world’s oil transits.
Several regional players have halted operations at their facilities in the region, with Iraq joining the queue most recently.
Baghdad has curtailed production from the Rumaila oil field by 700,000 b/d, from the West Qurna 2 oil field by 460,000 b/d and from the Maysan oil field by 325,000 b/d, Reuters reported.
Brent’s price moved higher “following reports that Iraq had cut output at the giant Rumaila oil field and appeared poised to shutter about 3mb/d [3 million b/d] of output, if the crisis persists,” ANZ Bank’s senior commodity strategist Daniel Hynes wrote.
A fire at storage facilities at the UAE port of Fujairah led to some operation shutdowns yesterday. Fujairah is one of the largest oil export hubs near the Strait of Hormuz.
The “sprawling conflict” adds further concerns to the escalating security risks for energy infrastructure across the Persian Gulf region, Hynes said.
Downward pressure:
Brent’s price has felt some downward pressure after the American Petroleum Institute (API) reported a surge in US crude stocks.
US crude oil inventories gained by 5.6 million bbls in the week ending 27 February, according to the API.
A rise in US crude stocks can indicate lower demand for oil and put some downward pressure Brent's price.
Official inventory data from the US Energy Information Administration (EIA) will be released later today.
By Aparupa Mazumder
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