Oil prices rose in early Asian trading on Tuesday, driven by fears of a tightening global supply. Brent crude climbed 55 cents to $65.18 a barrel, while U.S. West Texas Intermediate (WTI) increased 59 cents to $63.11 a barrel. The gains followed a nearly 3% rise in the previous session. The price jump reflected investor concerns over multiple geopolitical and production-related developments impacting global oil supply.
OPEC+ Output Restraint and Iran Tensions Drive Oil Prices Amid Supply Uncertainty
A key factor behind the recent surge in prices was OPEC+’s decision to maintain a modest production increase of 411,000 barrels per day for July. This move was less aggressive than some market participants had feared. By not raising output significantly, OPEC+ helped reinforce expectations of tight supply in the coming months, leading investors to unwind bearish positions and bet on higher prices.
Oil Prices Rise Sharply as OPEC+ Restraint, Iran Tensions, and Canadian Wildfires Fuel Supply FearsGeopolitical uncertainty further supported oil prices. Iran indicated it would reject a U.S. proposal intended to revive the nuclear agreement, citing the proposal’s failure to meet Tehran’s core interests, particularly regarding uranium enrichment. If nuclear negotiations collapse, sanctions on Iran are likely to remain in place, restricting the country’s oil exports and keeping global supply constrained.
Wildfires in Canada and OPEC+ Restraint Intensify Oil Supply Fears and Prices
In North America, wildfires in Alberta, Canada, have also disrupted the oil supply. The fires led to temporary shutdowns of oil and gas production, affecting more than 344,000 barrels per day—approximately 7% of Canada’s total output. This unexpected disruption added another layer of supply risk, bolstering oil prices further amid a tightening market outlook.
Market sentiment turned bullish as worst-case scenarios, such as a major OPEC+ supply hike, did not materialize. According to Daniel Hynes of ANZ, the restrained output decision relieved market participants and led to a correction in short positions. With ongoing geopolitical tensions and production disruptions, the oil market remains on edge, and prices are likely to stay elevated in the short term.
