Picture: REUTERS/SERGEI KARPUKHIN
Picture: REUTERS/SERGEI KARPUKHIN

Singapore/London — Oil prices rose on Tuesday on escalating US-Iran tensions and amid expectations that oil cartel Opec producers will continue to curb supply this year.

Gains were capped by concerns that a prolonged trade war between Washington and Beijing could lead to a global economic slowdown.

Brent crude futures, the international benchmark for oil prices, were at $72.31 a barrel at 10.30am GMT, up 34c, or 0.5%, from their last close. US West Texas Intermediate (WTI) crude futures were up 42c, or 0.7%, at $63.52 per barrel.

“Escalating tensions between the US and Iran, in addition to signs that Opec will continue its production cut, drove oil higher,” said Jasper Lawler, head of research at futures brokerage London Capital Group.

On Monday, US President Donald Trump threatened Iran with “great force” if it attacked US interests in the Middle East. This came after a rocket attack in Iraq’s capital Baghdad, which Washington suspects to have been organised by militia with ties to Iran.

Iran said on Tuesday that it would resist US pressure, declining further talks under current circumstances.

The tension comes amid an already tight market as Opec, Russia and other producers withhold supply to support prices. Saudi Arabia has signaled its willingness to continue curbing output until the end of the year. Opec will meet at the end of June or in early July.

Also adding to market tightness was the closure of a major pipeline in Nigeria and supply disruptions from Russia.

Price gains were constrained by pressure on financial markets, which have, this week, been weighed down by worries that the US and China are digging in for a long, costly trade war.

Reuters