Oil edges higher Tuesday as geopolitical tensions escalate, with the war in Ukraine intensifying and Iran poised to reject a U.S. nuclear deal proposal that could ease sanctions on the major oil producer.
Crude prices had surged nearly 3% on Monday after OPEC and its allies, known as OPEC+, maintained their July output increase at 411,000 barrels per day, matching previous months and falling short of some market expectations.
Brent crude futures rise 45 cents, or 0.7%, to $65.08 a barrel by midday in London. U.S. West Texas Intermediate crude climbs 31 cents, or 0.5%, to $62.83. Risk premiums return to oil markets following heavy strikes in Ukraine over the weekend, including drone battles, damage to a Russian highway bridge, and an attack on nuclear-capable bombers deep in Siberia.
Iran appears ready to reject a U.S. proposal aimed at resolving the long-standing nuclear dispute, with a diplomat saying it fails to meet Tehran’s interests or ease restrictions on uranium enrichment. The collapse of the nuclear talks could mean continued sanctions on Iranian oil exports, tightening global supply and supporting prices.
Further lifting crude prices, the dollar remains weak, with the index hovering near six-week lows as markets digest the impact of U.S. tariff policies and their potential drag on economic growth and inflation. A weaker dollar makes dollar-denominated commodities like oil cheaper for holders of other currencies.
Additional supply concerns arise from wildfires in Canada’s Alberta province, which disrupt over 344,000 barrels per day of oil sands production, roughly 7% of Canada’s total crude output. Prices may also find further support if U.S. inventory data confirms a projected decline in crude stockpiles.
