Oil prices posted modest gains on Tuesday as traders shifted their focus from easing tensions in the Middle East to growing global oil supplies and the outlook for demand, particularly from China.
Brent crude futures rose 28 cents, or 0.39 percent, to $72.29 a barrel, while US West Texas Intermediate crude gained 29 cents, or 0.26 percent, to $68.84 a barrel in early trading. The move followed Monday’s decline, which brought prices back to levels seen before the recent conflict involving Iran.
Although fears of major supply disruptions have eased, uncertainty over relations between the US and Iran continues to keep traders cautious.
Tim Waterer, chief market analyst at KCM Trade, said the recovery in oil supplies has reduced the immediate risk premium in prices. However, he noted that investors remain careful because of the unpredictable nature of ties between Washington and Tehran.
Fresh comments from US President Donald Trump also kept the market alert. Speaking on Monday, Trump said the United States would either reach an agreement with Iran or “finish the job,” repeating his warning of possible military action as Tehran maintained a defiant stance following the funeral of Ayatollah Ali Khamenei.
Market participants are closely monitoring discussions between the US and Iran over the security of shipping through the Strait of Hormuz, a key route for global oil exports. At the same time, attention has shifted to rising production from major oil exporters.
According to Reuters estimates, the United Arab Emirates increased crude production to more than 3.8 million barrels per day in June. That marked the country’s highest output since April 2020 and exceeded production levels seen before the recent Iran conflict.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, agreed on Sunday to raise production targets by another 188,000 barrels per day from August. The increase follows similar output hikes announced for June and July as the group continues to restore supply to the market.
Saudi Arabia also signalled a more competitive approach by reducing the August official selling price of its flagship Arab Light crude for Asian buyers. The price was cut to $1.50 per barrel below the Oman/Dubai benchmark, marking the biggest monthly reduction in more than 20 years.
Analysts say the next direction for oil prices will depend less on supply announcements and more on whether demand improves. Waterer said traders will be looking for signs of stronger consumption, especially in China, adding that the market has already priced in much of the positive supply news.
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