LONDON: Oil edged up on Tuesday, in the face of rising geopolitical tensions as the war in Ukraine ramped up despite peace talks in Turkey and Iran was set to reject a U.S. nuclear deal proposal that would be key to easing sanctions on the major oil producer.
Crude had gained nearly 3% on Monday after the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, kept its July output hike at 411,000 barrels per day, the same as earlier months and less than some in the market had feared.
Brent crude futures gained 45 cents, or 0.7%, to $65.08 a barrel by 1154 GMT. U.S. West Texas Intermediate crude was up 31 cents, or 0.5%, to $62.83.
“Risk premia have filtered back into the oil price following deep Ukraine strikes on Russia over the weekend,” said analyst Harry Tchilinguirian of Onyx Capital Group.
“But more importantly for the barrel count, there is the to and fro between the U.S. and Iran regarding uranium enrichment.”
Oil leaps 4% after OPEC+ keeps output increase unchanged
Ukraine and Russia at the weekend ramped up the war with one of the biggest drone battles of their conflict, a Russian highway bridge blown up over a passenger train and an attack on nuclear-capable bombers deep in Siberia.
Iran, meanwhile, was poised to reject a U.S. proposal to end a decades-old nuclear dispute, an Iranian diplomat said on Monday, saying it fails to address Tehran’s interests or soften Washington’s stance on uranium enrichment.
If the nuclear talks fail, it could mean continued sanctions on Iran, which would limit Iranian supply and be supportive of oil prices.
Further support came from the weak dollar. The dollar index held near six-week lows as investors weighed the outlook for U.S. President Donald Trump’s tariff policy and its potential to hurt growth and stoke inflation.
A weaker U.S. currency makes dollar-priced commodities such as oil less expensive for holders of other currencies.
“Crude oil prices continue to rise, supported by the weakening dollar,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Adding to supply worries, wildfires burning in Canada’s province of Alberta have affected more than 344,000 barrels per day of oil sands production, or about 7% of the country’s overall crude output, according to Reuters calculations.
Further price support could come if forecasts of a drop in U.S. crude inventories are realised in the latest round of weekly supply reports.
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