Oil prices continued their upward trend Tuesday, driven by renewed concerns over global supply security and heightened geopolitical tensions in Europe and the Middle East.
At the time of reporting, Brent crude traded at $64.85 per barrel, while West Texas Intermediate (WTI) stood at $62.82 per barrel, extending a nearly 3% gain recorded on Monday.
Russia-Ukraine Crisis and Iran Tensions Rattle Markets
The surge follows escalating tensions between Russia and Ukraine, which analysts fear could affect Russian oil infrastructure and exports. Additionally, talks between Iran and the U.S. on reviving the 2015 nuclear deal appear to have stalled, further tightening global supply expectations.
Reuters cited a senior diplomat close to the Iranian delegation who indicated that Iran is preparing to issue a formal rejection of the latest U.S. offer. The draft reportedly rejects Washington’s demand that Tehran halt all uranium enrichment, a key sticking point in the negotiations.
If the rejection is confirmed, analysts believe the collapse of talks would keep U.S. sanctions on Iranian oil in place, limiting Tehran’s crude exports largely to China and cutting off broader global access to one of OPEC’s major producers.
Canada Wildfires and OPEC+ Surprise Support Price Gains
In Canada, wildfires in Alberta have forced the shutdown of roughly 350,000 barrels per day of oil production, about 7% of the province’s total output. The disruption adds another layer of supply strain to already tight markets.
Oil traders also reacted positively to the latest OPEC+ production decision, which disappointed expectations for a larger output hike. Instead, the group opted for a more moderate increase, triggering a wave of short-covering and boosting investor sentiment.
“Investors unwound their bearish positions after the worst fears didn’t materialize,” said Daniel Hynes, Senior Commodity Strategist at ANZ, in a note referenced by Reuters.
Weaker Dollar Amplifies Oil Rally
A softer U.S. dollar added further momentum to oil prices, as a weakening greenback typically enhances the purchasing power of buyers using other currencies. According to Bloomberg, Wall Street expects continued dollar weakness, potentially lending further support to commodities across the board.
With multiple bullish triggers converging, analysts caution that volatility could persist in the oil market over the coming weeks, especially if geopolitical tensions escalate or further supply disruptions emerge.
