Oil prices rose modestly on Tuesday, with gains capped as traders weighed a rapid recovery in supply against lingering uncertainty over US-Iran relations and the outlook for demand.
Brent crude futures climbed 28 cents, or 0.39 per cent, to $72.29 a barrel as of 00:46 GMT. West Texas Intermediate added 29 cents, or 0.26 per cent, to $68.84 a barrel. Both benchmarks had settled on Monday near the levels recorded before the Iran war.
Tim Waterer, chief market analyst at KCM Trade, said the recovery in supplies had taken some of the immediate risk premium out of the market, but traders remained wary of assuming the current ceasefire would hold. “The market is still cautious about betting too heavily on the stability of the current truce, given the volatile nature of US-Iran relations,” he said.
That caution has a concrete trigger. On Monday, President Donald Trump said the United States would either reach a deal with Iran or “finish the job,” repeating his threat of military action at a moment when Tehran is signalling defiance in the days following the funeral of Supreme Leader Ayatollah Ali Khamenei. Investors are watching closely to see what any renewed escalation would mean for tanker traffic through the Strait of Hormuz.
OPEC and its allies, including Russia, agreed on Sunday to raise production targets by 548,000 barrels per day from August, on top of similar increases already approved for June and July.
