Oil prices rose on Tuesday, nearing a seven-month high
Oil prices approached a seven-month high due to US-Iran tensions and US trade policy. Investors assessed geopolitical risks ahead of the next round of US-Iran nuclear talks, while uncertainty surrounding US trade policy fueled broader concerns.
Brent crude futures rose 59 cents, or 0.8%, to $72.08 a barrel as of 04:24 GMT, while WTI crude futures rose 57 cents, or 0.9%, to $66.88 a barrel.
Brent traded at its highest level since July 31, while WTI was at its highest level since August 1.
At this stage, the geopolitical situation is clearly playing a major role in the rise of oil prices, and the current increase is largely driven not by a disruption of actual supply and demand balances, but by scenarios that could result from potential conflicts. The risk of a potential military escalation in the Middle East is increasing daily, and therefore, investors tend to hedge against worst-case scenarios.
Omani Foreign Minister Badr Albusaidi announced on Sunday that Iran and the U.S. will hold a third round of nuclear talks in Geneva on Thursday.
The United States wants Iran to abandon its nuclear program, but Iran categorically denies this and rejects allegations that it is developing atomic weapons.
A senior foreign ministry official said on Monday that the U.S. has withdrawn some personnel and their families from its embassy in Beirut due to growing concerns about the risk of military conflict with Iran.
Crude oil remains at the upper end of its $50 trading range, currently between $55-66, a range that has defined the last six months. A sustained break above this upper limit would pave the way for further gains towards the $70-72 levels. Developments toward easing tensions would likely lead to a pullback towards $61.
Looking at developments in trade policies, on Monday, after the US Supreme Court overturned the emergency tariffs imposed by President Trump, Trump warned countries against backing down from recently negotiated trade agreements with the US and said he would impose much higher tariffs under different trade laws.
Indeed, Trump continued to create uncertainty for global growth and fuel demand with a new round of tariff increases. On Saturday, Trump announced that the US would raise the temporary tariff on imports from all countries from 10% to 15% for 150 days, the maximum allowed by law.
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