Oil prices posted modest gains Tuesday, fueled by renewed geopolitical risk and signs of tightening supply, though upside may be limited by ongoing uncertainty around Iran and soft macroeconomic indicators.
As of late morning, WTI crude was trading at $63.76 (+1.98%), and Brent at $65.74 (+1.72%). Both benchmarks built on Monday’s nearly 3% rally after OPEC+ confirmed it would raise output by just 411,000 barrels per day in July—below what some market watchers feared. Murban crude also rose to $65.51 (+1.13%), while U.S. natural gas slipped to $3.661 (-0.89%).
Markets were jolted by an escalation in the Ukraine conflict over the weekend, including drone attacks and strikes on Russian infrastructure, as well as Iran signaling it would reject a U.S. proposal to revive the nuclear deal—an agreement that could unlock Iranian oil exports if sanctions were lifted. Tehran reportedly views the current deal as too one-sided and unlikely to curb Washington’s pressure on uranium enrichment.
Geopolitical heat and the unresolved U.S.-Iran standoff are reinforcing support for crude in the near term.
However, any rally may be short-lived. The U.S. dollar weakened on fresh tariff threats, and traders are still digesting signs that U.S. crude inventories likely fell last week—a bullish signal—but against a backdrop of slowing global growth and tepid Chinese demand.
Amrita Sen, co-founder and director of research at Energy Aspects, discussed the outlook for oil prices on Tuesday with CNBC, suggesting that any rallies in oil prices will likely be capped.
Without meaningful movement on Iran or a major OPEC+ surprise, most analysts expect rallies to stall in the mid-$60s for now.
By Julianne Geiger for Oilprice.com