Oil Prices Climb Amidst Geopolitical Tensions

Oil prices saw a notable increase on Tuesday, with futures contracts rising by 2.00% to $63.30 per barrel, up from $62.98. This surge is primarily driven by escalating geopolitical tensions in Eastern Europe, which intensified after Ukraine’s recent strikes deep within Russian territory.

Beyond the immediate conflict, several other factors are contributing to concerns about global oil supply. Hopes for a nuclear deal between Western powers and Iran are diminishing. This development supports the likelihood of continued sanctions on Tehran, which would keep Iranian oil output constrained and limit global supply.

Furthermore, persistent wildfires in Canada continue to impact oil production. These fires have led to the evacuation of production sites, disrupting approximately 344,000 barrels per day of output.

These supply-side concerns are currently outweighing earlier anxieties about increased supply stemming from the OPEC+ decision to boost output starting in July. The market appears to be prioritizing the immediate and potential long-term disruptions to supply channels, underscoring the delicate balance between geopolitical stability, natural disasters, and global energy markets.