Oil prices edged higher on Tuesday as traders shifted attention from easing Middle East tensions towards rising supply levels and the outlook for global demand.
Brent crude futures gained 28 cents or 0.39% to US$72.29 a barrel, while US West Texas Intermediate (WTI) crude rose 29 cents or 0.26% to US$68.84 a barrel as of 0046 GMT, according to Reuters.
The gains came after both benchmarks settled on Monday at levels close to those seen before the Iran conflict, as concerns over immediate supply disruptions eased.
“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,” said Tim Waterer, chief market analyst at KCM Trade.
Investors continued monitoring discussions between the United States and Iran over shipping activity through the Strait of Hormuz, while also tracking the pace of oil export recovery from the Gulf region.
United Arab Emirates crude production rose above 3.8 million barrels per day in June, its highest level since April 2020 and above pre-Iran war levels, following the country’s exit from OPEC+ production quotas in May, according to Reuters estimates.
Markets are also watching signs of demand recovery, particularly from China, with analysts saying the next move in oil prices would depend on whether improving supply expectations translate into actual market conditions.
“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,” Waterer added.
The Organisation of the Petroleum Exporting Countries and its allies, including Russia, agreed on Sunday to raise output targets by 188,000 barrels per day from August, following similar increases for June and July.
Meanwhile, Saudi Arabia reduced its August official selling price for its flagship Arab Light crude to Asia by US$11 from the previous month, bringing it to US$1.50 a barrel below the Oman/Dubai average. The cut marked the largest monthly reduction in more than two decades, according to Saudi Aramco’s pricing statement.
Reuters
