Supply fears in the oil market keeps Brent steady

The front-month ICE Brent contract moved $0.17/bbl higher on the day from Friday, to trade at $81.75/bbl at 09.00 GMT.

PHOTO: An oil pump jack. Getty Images

Upward pressure:

Brent futures have remained above the $80/bbl mark, driven by increased oil supply concerns due to ongoing attacks on ships in the Red Sea.

The Organisation of the Petroleum Exporting Countries (OPEC) and its allies have continued rolling out their voluntary oil supply cuts through the first quarter of this year. “This comes as the oil industry warns of what we have been talking about for years, a coming energy shortage,” said Price Futures Group’s senior market analyst Phil Flynn.

Oil market will face a shortage in oil supply by the end of 2025 because the world is failing to replenish crude reserves fast enough, US-based oil exploration company Occidental’s chief executive Vicki Hollub said in an interview with CNBC.

Meanwhile, OPEC expects total global oil demand to average 104.4 million b/d in 2024, “bolstered by strong air travel demand and healthy road mobility, including on-road diesel and trucking,” it said in its latest report.

Downward pressure:

Brent’s gains were partially capped by reports of Israel concluding its ground offensive in southern Gaza. About 1.5 million people are sheltering in that part of the city, according to the BBC.

The Israel Defense Forces (IDF) said it ceased a “series of strikes” south of the Gaza Strip, Reuters reported. This news comes days after the country’s Prime Minister Benjamin Netanyahu refused any talks of a ceasefire.

Brent futures faced some downward pressure last week due to talks of a ceasefire between Israel and Iran-backed Hamas militants. Prices have since rebounded after Israel turned down the ceasefire proposal.

By Aparupa Mazumder

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