Oil rises to near seven-month highs on US-Iran tensions

Oil prices ticked higher on Tuesday, approaching seven-month highs, as market participants weighed the potential impact of military escalation on supply in light of looming US-Iran nuclear talks.

Brent crude futures gained 48 cents, or 0.7 percent, to $71.97 a barrel at 06:58 GMT, while US crude futures were up 45 cents, or 0.7pc, to $66.76 a barrel.

Brent is at its strongest since July 31, while WTI is at its strongest since August 1.

“At this stage, geopolitics is clearly doing most of the heavy lifting for oil prices, with the current strength largely driven by anticipation rather than actual supply loss,” said Phillip Nova, senior market analyst, Priyanka Sachdeva.

“The risk of possible military escalation in the Middle East is gaining traction, and thus, traders seem to be hedging against worst-case outcomes.”

Iran and the US will hold a third round of nuclear talks on Thursday in Geneva, Oman’s Foreign Minister Badr Albusaidi said on Sunday.

The United States demands that Iran abandon its nuclear program, but Iran has flatly rejected the demand and denied it is seeking to build an atomic bomb.

US President Donald Trump tweeted on Monday that Iran will have a “very bad day” if it does not come to a deal.

“In the near-term, geopolitical factors surrounding the US-Iran conflict are likely to be the main driver of oil prices,” said OANDA senior market analyst Kelvin Wong.

“For now, WTI crude oil is moving within a short-term bullish cycle, as it remains above its 20-day moving average, which serves as a significant short-term support level at $63.90 per barrel.”

Regarding trade policies, US President Donald Trump warned countries on Monday not to walk away from trade agreements negotiated recently with the US after the Supreme Court ruled that his emergency tariffs were unconstitutional, stating that he will impose much higher tariffs on these countries using other trade laws.

“US President Donald Trump introduced uncertainty into global growth and fuel demand with his latest tariff increase,” said UOB Bank analysts in a client note.

Trump announced on Saturday that he would increase a temporary tariff from 10pc to 15pc on US imports from all countries, which is the maximum rate allowed by law.