Oil prices climbed on Tuesday due to strong summer gasoline demand, but supply remained tight due to sanctions imposed on Russian oil after its invasion of Ukraine.
By 0825 GMT, Brent crude had risen $1.61, or 1.4 percent, to $115.74 per barrel.
The price of July West Texas Intermediate (WTI) oil in the United States jumped $2.29, or 2.1 percent, to $111.85. The more active August WTI contract was up $2.48 to $110.47 a barrel.
According to UBS analyst Giovanni Staunovo, despite worries about economic growth, the latest figures on airline activity and mobility on U.S. roadways suggest steady oil demand.
“We expect oil demand to improve further, benefiting from the reopening of China, summer travel in the northern hemisphere and the weather getting warmer in the Middle East. With supply growth lagging demand growth over the coming months, we continue to expect higher oil prices,” he said.
Prices have been sustained by supply concerns after restrictions on oil shipments from Russia, the world’s second-largest oil supplier, as well as concerns about how Russian output may be affected by penalties on production equipment.
“Supply concerns are unlikely to subside unless there is a resolution to the Russia-Ukraine war, or unless we see a sharp rise in supply from either the U.S. or OPEC,” said Madhavi Mehta, commodities research analyst at Kotak Securities.
The chances of successfully negotiating a nuclear agreement with Iran and easing US sanctions on the Iranian energy industry are dwindling.
According to a United Nations nuclear watchdog assessment obtained by Reuters, Iran is ramping up its uranium enrichment by preparing to utilize upgraded centrifuges at its subterranean Fordow complex. more info
“Iran’s measures, if correct, likely mean we won’t be seeing a return of Iranian crude to greater world markets any time soon,” said OANDA analyst Jeffrey Halley.