Crude Oil Prices Rebound Above $72 per Barrel Amid Growing Demand Expectations

US-Iran Tensions Ease, Oil Prices Rise Slightly

Oil prices inched higher on Tuesday, despite capped gains, as market participants shifted their focus from easing geopolitical tensions in the Middle East to expectations of higher supply and the outlook for global demand. The Brent crude futures rose 28 cents, or 0.39%, to $72.29 a barrel, while US West Texas Intermediate (WTI) crude climbed 29 cents, or 0.26%, to $68.84 a barrel.

The recent developments in the US-Iran conflict have led to a decrease in the immediate risk premium, however, market participants remain wary of putting too much faith in the stability of the current truce given the on-again-off-again nature of US-Iran relations. The ongoing US-Iran negotiations are being closely monitored, particularly for their potential impact on shipping through the Strait of Hormuz, as well as the recovery in crude oil exports from the Gulf region.

The United Arab Emirates increased its crude production to more than in June, the highest level since April 2020 and above pre-Iran conflict levels, after exiting OPEC production quotas in May. This increase in production is a significant development, particularly in light of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, agreeing on Sunday to raise production targets by another from August.