WTI crude oil futures rose to around $73 per barrel on Tuesday, extending a nearly 2% gain from the previous session, as concerns about tighter Russian supply and rising geopolitical risks continued to support prices.
Oil increases thanks to geopolitical risks
Reports revealed that Russian oil production had fallen further below its OPEC+ quota in January, signaling tighter supply, while new US sanctions targeted individuals and tankers involved in transporting Iranian crude to China, putting additional pressure on Tehran. The growing geopolitical instability added to supply concerns, as President Trump urged Israel to end its ceasefire with Hamas if hostages were not returned by the weekend. This threat of renewed conflict between Israel and Hamas has raised the possibility of further disruptions in the region.
Price gains were limited by broader caution
However, the price gains were limited by broader caution due to escalating trade tensions and economic uncertainty. Trump’s recent imposition of steel and aluminum tariffs could potentially disrupt the US energy sector, particularly oil drillers who rely on specialty steel that is not readily available domestically. Meanwhile, soaring natural gas prices in Europe have made burning oil more cost-effective in some regions, potentially increasing demand for crude. These mixed factors are keeping oil prices in a delicate balance as market participants assess the outlook for both supply and demand.
