Oil Edges Higher as Traders Shift Focus to Supply and Demand Outlook

Oil prices edged higher on Tuesday, although gains remained modest as market attention shifted from recent geopolitical developments toward supply conditions and demand prospects. Brent crude rose 0.39% to $72.29 a barrel, while WTI gained 0.26% to $68.84 after both benchmarks settled near pre-conflict levels on Monday.

KCM Trade's Tim Waterer said the decline in the geopolitical risk premium appears to reflect improving supply conditions, while noting that markets remain cautious given ongoing uncertainty surrounding U.S.-Iran relations. U.S. President Donald Trump reiterated that Washington would seek a deal with Iran while also warning that military action remained an option. Iranian officials, meanwhile, continued to reject external pressure in recent public statements.

On the supply side, the United Arab Emirates increased crude production to more than 3.8 million barrels per day in June, its highest level since April 2020, following revised OPEC+ production arrangements. OPEC+ also agreed on Sunday to raise August production targets by a further 188,000 barrels per day, while Saudi Aramco lowered the August official selling price of its Arab Light crude for Asian buyers.

Waterer added that with much of the supply-side optimism already reflected in prices, oil's next move may depend more heavily on incoming demand data, particularly from China.

What's next: Market participants may monitor developments in U.S.-Iran relations, shipping activity through the Strait of Hormuz, Gulf crude export trends, and Chinese demand indicators for further direction.

This article is for general market information only and does not constitute investment advice.