Crude oil prices continued their upward trajectory on Tuesday, building on gains from the previous session, as growing geopolitical tensions and unexpected supply constraints rattled global markets.
As of the latest trading figures, Brent crude stood at $64.85 per barrel, while West Texas Intermediate (WTI) was priced at $62.82 per barrel. Both benchmarks climbed approximately 3% on Monday.
The rally was largely fueled by escalating fears over supply security following heightened tensions between Russia and Ukraine. Market participants increasingly worry the conflict could extend to Russian energy infrastructure, potentially disrupting exports from one of the world’s largest oil producers.
Compounding these concerns, a report revealed that Iran is preparing to reject a U.S. proposal for a renewed nuclear deal—one that would require Tehran to halt all uranium enrichment activities. “Iran is drafting a negative response to the U.S. proposal, which could be interpreted as a rejection,” said a senior diplomat familiar with the negotiations.
If the rejection is confirmed, it would likely mark the collapse of the talks, thereby preserving current U.S. sanctions on Iran’s oil sector. Such a scenario would continue to limit Iranian crude exports, with China remaining the primary buyer of its discounted oil.
Further supply pressure is coming from Canada, where wildfires in Alberta have forced the shutdown of roughly 350,000 barrels per day—about 7% of the province’s total oil output. The disruption has added to bullish sentiment in the market.
Meanwhile, investor expectations surrounding OPEC+ production adjustments also played a role in pushing prices higher. Many traders had anticipated a significant output increase, but when the group refrained from making such a move, markets responded positively.
“With the worst fears not panning out, investors unwound their bearish positions they had built prior to the weekend’s meeting,” said Daniel Hynes, senior commodity strategist at ANZ.
A weakening U.S. dollar further supported crude prices. It reported that Wall Street anticipates continued depreciation of the greenback, which typically boosts demand for dollar-denominated commodities like oil.
With multiple supply-side risks mounting and no clear resolution in sight, analysts expect oil prices to remain elevated in the near term.
