Oil prices climb due to supply concerns in Canada, Russia, and Iran

With Iran expected to reject a U.S. nuclear deal plan that would be crucial to lifting sanctions on the major oil producer and Canadian output being hampered by wildfires, oil prices increased in early Asia trade on Tuesday.

By 0000 GMT, Brent crude futures were up 55 cents, or 0.85%, to $65.18 a barrel. After climbing around 1% earlier in the day, U.S. West Texas Intermediate crude was up 59 cents, or 0.94%, to $63.11 per barrel.

Following OPEC+’s agreement to maintain output rises in July at 411,000 barrels per day—less than some market participants had feared and the same raise as in the previous two months—both contracts saw gains of around 3% in the previous session.

Tuesday’s prices were supported by geopolitical tensions. An Iranian ambassador stated on Monday that Iran was ready to reject a U.S. plan to resolve a long-running nuclear conflict because it does not take into account Tehran’s interests or moderate Washington’s position on uranium enrichment.

Failure of the U.S.-Iranian nuclear negotiations could result in further sanctions on Iran, which would restrict Iranian supplies and boost oil prices.

Geopolitical risk premiums and supply worries were further exacerbated by the ongoing conflict between Russia and Ukraine.

Concerns over supply may be heightened by the fact that a wildfire in Canada’s Alberta province has forced a temporary halt to certain oil and gas production, potentially lowering supplies.

Approximately 7% of Canada’s total crude oil production, or roughly 344,000 barrels per day of oil sands production, has been impacted by wildfires, according to Reuters calculations.

Relief that the Organization of the Petroleum Exporting Countries and its allies, including Russia, did not go with a more significant production increase than in the preceding two months was the main cause of Monday’s sharp increase in oil prices.

In a note, ANZ senior commodity analyst Daniel Hynes stated, “With the worst fears not panning out, investors unwound their bearish positions they had built prior to the weekend’s meeting.”