Oil prices extended their upward momentum on Tuesday, building on Monday’s rally as geopolitical tensions and uncertainty over a potential U.S.-Iran nuclear agreement raised fresh concerns about global crude supply disruptions.
As of 08:45 ET (12:45 GMT), Brent crude rose by 1.2% to $65.41 per barrel, while West Texas Intermediate (WTI) advanced 1.4% to $63.40 per barrel. The market had already posted gains of nearly 3% the previous day, following the decision by OPEC+ to stick with its planned production increase of 411,000 barrels per day for July—less than some traders had anticipated.
Iran Nuclear Talks Cast Shadow on Supply
Doubts are growing around the prospects of a U.S.-Iran nuclear agreement that could ease sanctions and allow Tehran to ramp up its oil exports. A senior Iranian official indicated on Monday that Iran may reject a U.S. proposal, adding to the uncertainty. Former President Donald Trump also weighed in, stating the U.S. would not permit any uranium enrichment by Iran—likely a major sticking point in negotiations.
Without a deal, sanctions on Iran’s oil exports remain in force, keeping supply from one of the world’s major producers off the global market.
Russia-Ukraine Conflict Fuels Concerns
Meanwhile, the ongoing war between Russia and Ukraine remains a critical factor for oil traders. Talks for a ceasefire appear stalled, especially after a Ukrainian drone strike over the weekend hit targets deep inside Russian territory. Moscow has made any peace contingent on Ukraine surrendering significant territory, a non-starter for Kyiv.
Amid these tensions, reports emerged that U.S. lawmakers are considering fresh sanctions on Russia’s energy exports, potentially targeting major importers like China and India. Such measures would further constrain an already tight oil market.
Calls by former President Trump for a ceasefire have reportedly had little effect, with Russia showing no signs of softening its stance.
Alberta Wildfires Add to Supply Woes
Adding to the bullish sentiment, wildfires in Alberta—Canada’s key oil-producing region—have forced the shutdown of significant output. Analysts at ING estimated that roughly 350,000 barrels per day, or around 7% of Canada’s oil production, have been taken offline due to the fires.
These multiple supply-side pressures are helping to sustain oil’s rally, with traders keeping a close eye on developments in Iran, Ukraine, and Canada.