Oil Prices Hold Gains On Geopolitical And Supply Risks

By Joseph Dahrieh, Managing Principal at Tickmill

Crude oil futures held steady Tuesday after a sharp rise the previous day, supported by supply concerns and mounting geopolitical tensions. The market remains cautious ahead of Iran’s potential rejection of the latest U.S. nuclear proposal, a move that could perpetuate sanctions and restrict Tehran’s oil exports. Compounding supply worries, wildfires in Alberta have temporarily curtailed Canadian production. However, OPEC+’s announcement of a July output increase of 411,000 barrels per day could limit the upside potential.

Looking ahead, the oil market could remain exposed to the changing conditions on the supply and demand sides. While supply constraints and geopolitical risks are likely to sustain prices, OPEC+’s commitment to steady production increases to meet demand growth could moderate further gains. Against this backdrop, crude prices might remain supported but range-bound. Traders could monitor any new data from the US and China, with US crude inventory figures being released tomorrow.