Oil prices nudged upward on Tuesday, though the rally was modest as traders moved past recent geopolitical concerns in the Middle East and set their sights on rising supply levels and the broader demand picture.
Brent crude futures climbed 28 cents, or 0.39%, reaching $72.29 per barrel, while U.S. West Texas Intermediate crude rose 29 cents, or 0.26%, to $68.84 a barrel as of 0046 GMT. Both benchmarks had settled near pre-Iran war levels on Monday.
Tim Waterer, chief market analyst at KCM Trade, described the current mood in the market: “The steps towards recovery in supply have eased the immediate risk premium, but the market remains wary of putting too much faith in the stability of the current truce given the on again-off again nature of U.S.-Iran relations.”
On Monday, President Donald Trump renewed his threat of military action, saying the United States would either reach a deal with Iran or “finish the job.” The statement came as Tehran signaled defiance following the funeral of former Supreme Leader Ayatollah Ali Khamenei.
Market participants have been closely monitoring diplomatic discussions between Washington and Tehran over the status of shipping lanes through the Strait of Hormuz, while also keeping tabs on the rebound in oil exports from Gulf nations.
According to Reuters estimates, the United Arab Emirates boosted crude production above 3.8 million barrels per day in June — the highest level since April 2020 and above pre-Iran war output — after stepping outside OPEC+ production quotas in May.
Waterer offered a cautious outlook on what comes next, saying: “We will be watching for early signs of demand response, particularly from China. The market has priced in a lot of the positive supply news, so the next leg in oil prices will depend on whether physical reality matches the optimistic headlines.”
Adding further downward pressure on prices, the Organization of the Petroleum Exporting Countries and its allies, including Russia, agreed Sunday to raise output targets by an additional 188,000 barrels per day starting in August — building on similar increases already set for June and July.
Saudi Arabia also announced a significant price cut, lowering its August official selling price for Arab Light crude to Asia to $1.50 below the Oman/Dubai average. That represents an $11 reduction from the prior month and marks the steepest price drop in more than two decades, according to a pricing statement from Saudi Aramco released Monday.
