Crude Oil Prices Rise Due To Geopolitical Issues, Supply Concerns

Oil prices persisted in rising on Tuesday, fueled by fresh worries about the security of global supply and increased geopolitical tensions in Europe and the Middle East.

Brent crude was priced at $64.85 per barrel, and West Texas Intermediate (WTI) was at $62.82 per barrel, continuing the nearly 3% increase seen on Monday.

The recent increase is a result of rising tensions between Russia and Ukraine, which analysts worry might impact Russian oil infrastructure and exports. Furthermore, the discussions between Iran and the U.S. aiming to revive the 2015 nuclear agreement seem to have come to a standstill, which is adding to concerns about a tighter global supply.

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Reuters reported that a senior diplomat familiar with the Iranian delegation suggested that Iran is set to officially decline the most recent proposal from the U.S. The current draft is said to turn down Washington’s request for Tehran to completely cease its uranium enrichment activities, which has been a major point of contention in the discussions.

If the rejection is upheld, experts think that the breakdown in negotiations would result in U.S. sanctions on Iranian oil remaining, significantly restricting Tehran’s oil exports to mainly China and preventing wider global access to one of OPEC’s major producers.

In Canada, wildfires in Alberta have led to the temporary closure of about 350,000 barrels per day of oil production, which represents around 7% of the province’s total output. This disruption further intensifies the supply challenges in markets that are already experiencing tight conditions.

Oil traders responded favorably to the recent OPEC+ production decision, which fell short of anticipated expectations for a substantial output increase. Instead, the group chose a more measured boost, leading to a surge in short-covering and enhancing investor confidence.

A decline in the strength of the U.S. dollar further boosted oil prices. Generally, when the dollar weakens, buyers using other currencies gain more purchasing power. Bloomberg reports that Wall Street anticipates the dollar’s continued weakness, which could provide further support to commodities overall.