Crude oil extends gains amid fears over disruption in US-Iran peace talks

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Crude oil prices extended their gains, rising more than 1 percent on Tuesday amid mounting fears of supply disruptions as geopolitical tensions in the Middle East intensified. The escalation comes as the United States and Iran exchanged drone and missile strikes, further clouding the prospects for an ongoing peace agreement and heightening concerns over regional oil supplies. However, gains remained capped amid concerns over weakening demand, despite falling U.S. oil inventories and a significant volume of supply outages from Gulf oilfields damaged during the more than three-month-long geopolitical conflict.

Benchmark Brent crude futures to August delivery on the InterContinental Exchange (ICE) added 1.09 percent, or US$ 1.02 a barrel, to settle at US$ 96 a barrel on Tuesday, up from US$ 94.98 a barrel on Monday. This marked the second consecutive day of gains after the energy futures climbed 4.2 percent, or US$ 3.86 a barrel, in the previous session. The bullish direction emerged following a sharp 11 percent decline last week, adding to the broader bearish momentum after prices had already slumped 17 percent in might.

Similarly, West Texas Intermediate (WTI) futures to July delivery on the New York Mercantile Exchange (Nymex) rose 1.7 percent, or US$ 1.60 a barrel, to settle at US$ 93.76 a barrel on Tuesday, compared with US$ 92.16 a barrel at the previous close. The U.S. benchmark crude futures cutting-edge to the second consecutive session, indicating a rise in regional demand amid continuing transport disruptions through the Strait of Hormuz, a critical transit route that handles nearly one-fifth of global oil supplies. Tuesday’s rally lifted both benchmarks to their highest levels since might 26.

An analyst at Kedia Stocks & Commodities Research said, “The surge in crude oil prices was supported by tightening global supply conditions, strong export demand, and persistent concerns over Middle East disruptions. Market sentiment remained bullish after the International Energy Agency warned that global oil inventories could fall to critically low or historically low levels ahead of the peak summer demand season if current stock drawdowns continue. Supply concerns were further amplified by ongoing disruptions linked to the U.S.-Israel conflict with Iran, which has significantly impacted energy flows through the Strait of Hormuz. Additional support came from robust U.S. export demand, with crude exports rising to a record 5.6 million barrels per day in might as Asian and European refiners increased purchases.”

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