Oil prices moved slightly higher on Tuesday, but gains remained limited as investors turned their attention from Middle East tensions to global oil supply and demand.
Brent crude futures rose 0.39%, to $72.29 a barrel. U.S West Texas Intermediate crude gained 0.26%, to $68.84 a barrel. Both benchmarks had fallen to levels seen before the Iran conflict.
Market analysts said concerns about supply disruptions have eased. However, investors remain cautious because relations between the United States and Iran are still uncertain.
Tim Waterer, chief market analyst at KCM trade, said the recent increase in oil supply has reduced the immediate risk in the market. He added that traders are still watching the fragile ceasefire and changing U.S-Iran relations.
U.S President Donald Trump said that Washington would either reach a deal with Iran or "finish the job." His comments renewed concerns about possible military action, even as Iran continued to show a defiant stance.
Investors are also monitoring talks between the United States and Iran over shipping through the Strait of Hormuz, one of the world's most important oil transit routes.
Meanwhile, the United Arab Emirates increased crude oil production to more than 3.8 million barrels per day in June by considering the country's highest production level since April 2020.
Analysts are also watching oil demand, especially in China. Waterer said the market has already priced in much of the positive supply news. He added that future oil prices will depend on whether actual demand matches market expectations.
On Sunday, OPEC+ agreed to raise its oil production target by another 188,000 barrels per day starting in August. The increase follows similar production hikes announced for June and July.
Saudi Arabia also lowered the August official selling price of its Arab light crude for Asian buyers. The new price is $1.50 per barrel below the Oman/Dubai benchmark. According to a Saudi Aramco pricing statement, it is the biggest monthly price cut in more than 20 years.
