Oil prices rise on focus on supply recovery, demand

Oil prices rose slightly on Tuesday, but gains were limited as traders ignored lessening geopolitical tensions in the Middle East and focused instead on supply increases and demand predictions.

Brent crude futures were up 38 cents, or 0.5%, at $72.37 a barrel, and U.S. West Texas Intermediate crude increased 30 cents, or 0.4%, to $68.85 a barrel as of 0350 GMT, having closed Monday at about pre-Iran conflict levels.The moves toward recovery in supply have softened the immediate risk premium but the market remains hesitant of putting too much faith in the stability of the present truce given the on again off again nature of U.S.-Iran ties,” said Tim Waterer, chief market analyst at KCM Trade.We will be looking for early evidence of ​demand response, notably from China. “The market has priced in a lot of the good news on the supply side, so the next leg in oil ​prices will depend on whether the physical reality meets the optimistic headlines.

President Donald Trump said Monday the United States would either strike a deal with Iran or “finish the job,” reiterating his threat of military action as Tehran projected defiance after the funeral of former Supreme Leader Ayatollah Ali Khamenei.

Investors have been monitoring the health of ships via the Strait of Hormuz as they keep an eye on the progress of U.S.-Iran talks and the resurgence of Gulf oil exports.

Iran’s Revolutionary Guards launched at least two missiles at commercial ships traversing the Strait of Hormuz on Monday night, Axios said, citing two U.S. sources. The report indicated the commercial ships were badly damaged but there were no casualties.

Japanese-owned supertankers carrying Saudi Arabian crude headed on Tuesday to the Strait of Hormuz to leave the Gulf, shipping data revealed, joining a fleet of previously stranded vessels that escaped a day earlier.

Oil flow recovery is proving slower than predicted, ANZ analysts said in a report, despite the recent rise in strait activity.The first rebound in tanker transits across the Strait of Hormuz has stumbled, with vessel crossings continuing in single digits and no steady improvement in sight, they claimed.”The interim U.S.-Iran deal has diminished near-term geopolitical risks but shipping operators are still wary and curtail how quickly crude exports can return ​to normal levels.”

Meanwhile crude output from the United Arab Emirates topped more than 3.8 million barrels per day in June, its highest since April 2020 and beyond pre-Iran war levels, after it exited OPEC+ production limitations in May, according to Reuters estimates.

The Organization of the Petroleum Exporting Countries and allies including Russia agreed Sunday to raise output objectives by an additional 188,000 barrels per day from August, on top of comparable increases for June and July.

Saudi Arabia lowered the August official selling price (OSP) for its Arab Light crude to Asia by $1.50 a barrel below the Oman/Dubai average, a $11 fall from the previous month and the greatest cut in more than two decades, according to a Saudi Aramco pricing announcement on Monday.