Oil prices saw modest gains Tuesday, driven by renewed geopolitical risks and signs of tighter supply. However, gains could be limited due to ongoing uncertainty around Iran and weak economic data.
By late morning, West Texas Intermediate (WTI) crude traded at $63.76, up 1.98%. Brent crude rose 1.72% to $65.74. Both benchmarks extended Monday’s nearly 3% rally after OPEC+ confirmed it would raise output by just 411,000 barrels per day in July, less than some had expected. Murban crude also gained 1.13% to $65.51, while U.S. natural gas slipped 0.89% to $3.661.
The market reacted to increased tensions in Ukraine over the weekend, including drone attacks and strikes on Russian infrastructure. Meanwhile, Iran signaled it would reject a U.S. offer to revive the nuclear deal, which could have lifted sanctions and boosted Iranian oil exports. Tehran views the deal as one-sided and unlikely to reduce U.S. pressure on its uranium enrichment.
These geopolitical risks and the stalled U.S.-Iran negotiations are providing short-term support for crude prices.
Still, any rally may be limited. The U.S. dollar weakened amid new tariff threats, and while U.S. crude inventories likely fell last week—generally a positive sign—global growth is slowing, and Chinese demand remains weak.
Amrita Sen, co-founder and director of research at Energy Aspects, told CNBC that oil price rallies will probably remain capped. Without progress on Iran or surprises from OPEC+, analysts expect prices to hover in the mid-$60 range for now.
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