Oil prices inched higher on Tuesday as market attention shifted from geopolitical tensions to supply-demand fundamentals and the recovery of shipping through the Strait of Hormuz. Around 7 am, West Texas Intermediate (WTI) crude was trading at $68.83 a barrel, up 0.41 per cent, while Brent crude rose 0.38% to $72.26 a barrel.
Price gains remained limited as traders weighed rising global crude supplies and demand prospects. The market also continued to monitor developments in the Strait of Hormuz after a tanker was struck by a projectile near Limah, Oman, early on Tuesday. According to the United Kingdom Maritime Trade Operations (UKMTO), the vessel was travelling south through the Strait of Hormuz towards the Gulf of Oman when the projectile hit its port side, causing a fire. UKMTO said there was no environmental impact and an investigation is underway.
No group immediately claimed responsibility for the attack. However, Iran is suspected of attacking at least two other vessels travelling near Oman in recent days. Investors are also tracking discussions between the United States and Iran over the future of shipping through the Strait of Hormuz, while monitoring the recovery of Gulf oil exports. Earlier this week, US President Donald Trump said the United States would either reach a deal with Iran or "finish the job", renewing the possibility of military action.
Despite renewed regional tensions, oil prices remained capped as markets focused on increasing supplies. According to Reuters estimates, the United Arab Emirates produced more than 3.8 million barrels of crude per day in June, its highest output since April 2020 and above pre-Iran war levels after exiting OPEC+ production quotas in May. Supply expectations also remained in focus after OPEC+ agreed to increase output targets by 188,000 barrels per day from August, following similar increases in June and July.
Adding to expectations of higher supply, Saudi Arabia reduced the August official selling price of its flagship Arab Light crude for Asia to $1.50 a barrel below the Oman/Dubai average. According to a Saudi Aramco pricing statement, the price was cut by $1.10 from the previous month, marking the largest monthly reduction in more than two decades. |
