Oil prices ticked up on Tuesday on concerns about supply, with Iran set to reject a US nuclear deal proposal that would be key to easing sanctions on the major oil producer, while weakness in the dollar also supported prices.
Brent crude futures gained 21 cents, or 0.32%, to $64.84 a barrel by 0437 GMT. US West Texas Intermediate crude was up 27 cents, or 0.43%, to $62.79 a barrel, after rising about 1% earlier in the session.
The oil market surged higher on Monday as rising geopolitical risks and a supply hike from OPEC+ that fell short of expectations provided a boost, said ING analysts in a note.
“The strength continued into early morning trading today,” ING said on Tuesday.
Both contracts gained nearly 3% in the previous session after the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, agreed to keep output increases in July at 411,000 barrels per day, which was less than some in the market had feared and the same hike as the previous two months.
“With the worst fears not panning out, investors unwound their bearish positions they had built prior to the weekend’s meeting,” ANZ analysts said in a note.
Meanwhile, the dollar index, which measures its performance against six other major currencies, held near six-week lows as markets weighed the outlook for President Donald Trump’s tariff policy and its potential to hurt growth and stoke inflation.
A weaker US 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.
Geopolitical tensions also supported prices. Iran was poised to reject a US 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 nuclear talks between the US and Iran fail, it could mean continued sanctions on Iran, which would limit Iranian supply and be supportive of oil prices.
Adding to supply worries, a wildfire in the province of Alberta in Canada has prompted a temporary shutdown of some oil and gas production, which could reduce supply.
According to Reuters calculations, wildfires in Canada have affected more than 344,000 bpd of oil sands production, or about 7% of the country’s overall crude oil output.
