Oil prices increased on Tuesday due to concerns regarding supply, as Iran is set to reject a U.S. nuclear deal proposal that is crucial for easing sanctions on the major oil producer. Additionally, the weakness in the dollar also supported prices.
Brent crude futures rose by 21 cents, or 0.32 percent, to $64.84 a barrel by 04:37 GMT (currently trading above $64.85). U.S. West Texas Intermediate crude was up 27 cents, or 0.43 percent, to $62.79 a barrel (currently trading above $62.80), after experiencing a rise of about 1 percent earlier in the session.
The oil market surged higher on Monday, driven by rising geopolitical risks and a supply hike from OPEC+ that fell short of expectations, providing a boost, according to ING analysts in a note. “The strength continued into early morning trading today,” Reuters reported, citing ING on Tuesday.
Both contracts gained nearly 3 percent in the previous session after the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, agreed to maintain output increases in July at 411,000 barrels per day. This figure was less than some in the market had feared and matched the hike seen in the previous two months. “With the worst fears not panning out, investors unwound their bearish positions they had built prior to the weekend’s meeting,” ANZ analysts said in a note.
Read more: Oil prices climb more than $1 a barrel as OPEC+ raises output by 411,000 bpd
Weaker dollar lowers oil prices for global buyers
Meanwhile, the dollar index, which measures its performance against six other major currencies, held near six-week lows as markets assessed the outlook for President Donald Trump’s tariff policy and its potential to harm growth and stoke inflation. A weaker U.S. currency makes dollar-priced commodities such as oil less expensive for holders of other currencies.
“Crude oil prices continue to rise, supported by the weakening dollar,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. Geopolitical tensions also provided support for prices. Iran was poised to reject a U.S. proposal aimed at resolving a decades-old nuclear dispute, as an Iranian diplomat stated on Monday that it fails to address Tehran’s interests or soften Washington’s stance on uranium enrichment.
If nuclear talks between the U.S. and Iran collapse, it could lead to continued sanctions on Iran, limiting its supply and supporting oil prices.
Adding to supply worries, a wildfire in the province of Alberta in Canada has triggered a temporary shutdown of some oil and gas production, which could further reduce supply. According to Reuters calculations, wildfires in Canada have impacted more than 344,000 barrels per day of oil sands production, or about 7 percent of the country’s overall crude oil output.
