UPDATE 2-ICE increases margins for front-month Brent crude futures by 19%

(Updates to clarify ICE attribution in paragraph 3)

By Rowena Edwards

March 24 (Reuters) - ICE has increased the margins for May Brent crude futures by 19% effective March 25, the third margin update this year.

ICE increased margins for front-month Brent crude futures to $11,902 per 1,000 barrels, from $10,030 previously, and follows updates effective Jan. 6 and March 14.

This is the third margin update to Brent futures by ICE in 2022, according to ICE.

The move relates to initial margins, which are collateral paid by investors in futures markets to a clearing house to cover the risk of default by that investor.

The collateral is returned to the buyer or seller when they close their positions or the contract expires.

Higher initial margins can make maintaining a futures position more expensive and applies to long and short positions, analysts said.

"Clearing banks have started to increase more than the exchange margins but that is their prerogative and their credit risk," Vitol's chief financial officer Jeffrey Dellapina said at the FT Commodities Global Summit this week.

"Of course we are kicking and screaming and saying it's totally unjustified ... but it's natural, exchanges tend to lag the calculations and banks that endure the credit risk tend to take different views," Dellapina added.

Analysts partially attributed a $3 a barrel drop in Brent crude oil prices on Thursday to the ICE announcement.

(Reporting by Rowena Edwards; Editing by Edmund Blair and Sam Holmes)