Oil Prices Crude Edges Higher as Markets Watch Supply and Demand

Oil Prices edged higher on Tuesday as traders shifted their focus from easing Middle East tensions to rising global supply and future demand.

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Brent crude futures gained 38 cents, or 0.5%, to $72.37 a barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude rose 30 cents, or 0.4%, to $68.85 a barrel after both benchmarks returned to pre-conflict levels on Monday.

Supply Outlook Caps Gains

Although geopolitical tensions have eased, investors remain cautious about the outlook.

Market analysts said higher oil production and uncertain demand continue to limit stronger price gains. As a result, crude prices remain under pressure despite recent stability.

Tim Waterer, Chief Market Analyst at KCM Trade, said the recovery in oil supply has reduced the immediate geopolitical risk premium. However, he noted that uncertainty surrounding U.S.-Iran relations continues to influence market sentiment.

Strait of Hormuz Remains in Focus

Investors are also monitoring developments in the Strait of Hormuz, a key global oil shipping route.

According to reports, Iran’s Revolutionary Guards fired missiles at commercial ships passing through the strait on Monday night. While the vessels suffered damage, no casualties were reported.

Meanwhile, Japanese-owned supertankers carrying Saudi crude resumed their journeys through the waterway. However, analysts said shipping activity has recovered more slowly than expected.

OPEC+ Output Increases

At the same time, higher production from major oil exporters is adding to supply expectations.

The United Arab Emirates increased crude production to more than 3.8 million barrels per day in June, its highest level since April 2020.

Furthermore, OPEC+ agreed to raise production targets by another 188,000 barrels per day from August, following similar increases in June and July.

Saudi Arabia Cuts Selling Price

Saudi Arabia also reduced 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. Notably, this marks the largest monthly reduction in more than two decades.

Looking ahead, analysts said oil prices will depend on global demand, particularly from China, as well as shipping activity in the Strait of Hormuz and future supply levels.