Brent: Prices firm as OPEC risks grow – ING

ING’s Warren Patterson and Ewa Manthey note Brent Oil prices have recovered, with ICE Brent up 2.1% as prospects for renewed US-Iran talks fade and flows through the Strait of Hormuz gradually increase. They highlight Venezuela’s potential exit from OPEC as relations with the US improve, which could reduce OPEC’s formal influence but still leave the wider OPEC+ group with substantial market power.

Brent supported by geopolitics and OPEC shifts

"Oil prices ended higher for the first time this week yesterday, with ICE Brent settling up 2.1%. The renewed strength comes after reports that President Trump told mediators the US has no intention of returning to the terms of the June Memorandum of Understanding."

"Instead, he indicated, the US is happy to see whether growing economic pressure on Iran yields better results. Optimism grew through the week amid efforts to restart talks."

"Despite diplomatic efforts hitting a roadblock, there are growing signs of additional oil flowing through the Strait of Hormuz. We’ve been assuming oil flows through this key chokepoint have averaged 5m b/d."

"OPEC faces the risk of another member exiting the group after the UAE’s departure earlier this year. Venezuela is considering leaving the group as relations with the US improve following the ousting of Nicolas Maduro at the start of the year."

"While an exit would reduce OPEC’s influence over the oil market, the group still holds a large market share, particularly when you factor in OPEC+."