Crude oil prices held firm on Tuesday as rising geopolitical tensions in the Middle East and Eastern Europe continued to support market sentiment.
Brent crude oil, against which Nigerian crude oil is priced, rose by 5 cents or 0.1 percent to close at $64.68 per barrel by 11:00 a.m in Nigeria while U.S. West Texas Intermediate (WTI) gained 16 cents or 0.3 percent to settle at $62.68 per barrel.
The muted gains followed a near 3 percent increase in prices on Monday, driven by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) maintaining a conservative production stance for July.
The cartel kept its output increase at 411,000 barrels per day, in line with previous months and below market expectations for a more aggressive supply ramp-up.
Oil markets received further support from escalating tensions in Iran and Ukraine. An Iranian diplomat said on Monday that Tehran was set to reject a U.S. nuclear deal proposal, citing failure to address core Iranian interests and ongoing disagreements over uranium enrichment.
A collapse in nuclear negotiations would maintain existing U.S. sanctions on Iran, keeping a significant portion of Iranian crude off the market.
“The U.S.-Iran standoff over uranium enrichment continues to inject uncertainty into global oil supply forecasts,” said Harry Tchilinguirian, head of commodity strategy at Onyx Capital Group. “With no resolution in sight, the market is pricing in a prolonged restriction on Iranian exports.”
In Eastern Europe, military escalations between Russia and Ukraine have raised fresh concerns over global energy supply chains. The weekend witnessed one of the largest drone attacks since the war began, including the destruction of a key Russian highway bridge and damage to nuclear-capable military assets deep within Siberia.
“The renewed conflict in Ukraine has reintroduced risk premiums into oil markets,” Tchilinguirian added.
In addition to geopolitical factors, supply disruptions in Canada’s Alberta province contributed to bullish sentiment. Ongoing wildfires have affected an estimated 344,000 barrels per day of oil sands production, representing approximately 7 percent of Canada’s total crude output, according to Reuters estimates.
On the macroeconomic front, a weakening U.S. dollar also underpinned oil prices. The dollar index held near six-week lows amid investor caution over the direction of U.S. trade and monetary policy. A softer dollar generally makes dollar-denominated commodities such as oil more affordable for holders of other currencies, thereby increasing demand.
“Crude oil prices continue to rise, supported by the weakening dollar and persistent supply concerns,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Investors are now awaiting the latest U.S. crude inventory data, which could further influence price direction. Preliminary expectations suggest a drawdown in U.S. stockpiles, which, if confirmed, would reinforce the current upward momentum in the market.
Despite the supportive fundamentals, analysts caution that near-term volatility could persist, especially if diplomatic negotiations with Iran collapse or if the Russia-Ukraine conflict intensifies. Market participants are also closely watching OPEC+ dynamics, particularly ahead of the group’s upcoming ministerial meetings where future output policies will be discussed.
For now, oil prices remain buoyed by a convergence of supply-side disruptions, geopolitical risk, and macroeconomic drivers, with Brent holding steady around the $64.68 mark.
