Oil prices remained relatively stable on Tuesday as markets weighed ongoing geopolitical tensions involving U.S.-Iran nuclear negotiations and Russia-Ukraine peace efforts, alongside lackluster economic data from China, the world’s largest crude importer.
Price Movements:
Brent crude futures edged down by 16 cents, or 0.2%, settling at $65.38 per barrel. U.S. West Texas Intermediate (WTI) crude also slipped 13 cents, or 0.2%, to close at $62.56.
Iran Deal in Question:
Iran’s Supreme Leader Ayatollah Ali Khamenei criticized U.S. demands to halt uranium enrichment, calling them “excessive,” casting doubt over the likelihood of a new nuclear deal. StoneX analyst Alex Hodes noted that easing sanctions could enable Iran to boost oil exports by 300,000 to 400,000 barrels per day. In 2024, Iran ranked as OPEC’s third-largest oil producer, behind Saudi Arabia and Iraq, based on U.S. government data.
Russia-Ukraine Peace Talks & Sanctions:
The EU and UK imposed new sanctions on Russia independently of the U.S., following President Trump’s call with President Vladimir Putin, which failed to secure a ceasefire in Ukraine. Ukraine, meanwhile, urged G7 nations to cut the cap on Russian seaborne crude to $30 per barrel from the current $60. However, SEB analyst Bjarne Schieldrop said a swift resolution to the conflict was unlikely and warned that any potential increase in Russian oil supply would face timing and policy constraints under OPEC+.
Russia remained the world’s second-largest oil producer in 2024, trailing only the U.S., according to federal data.
China’s Weak Economic Signals:
Disappointing Chinese economic figures—slower industrial output and soft retail sales—added further downward pressure on oil markets, amid concerns of weakened fuel consumption. Nevertheless, Goldman Sachs noted a rebound in Chinese trade activity late Monday, though this analysis did not incorporate the recent 90-day tariff pause between the U.S. and China.
Europe & the Fed:
Germany’s Finance Minister Lars Klingbeil vowed to implement prompt investment measures to counter trade-related uncertainty. Meanwhile, at least seven U.S. Federal Reserve officials are scheduled to speak on Tuesday. Markets are currently pricing in two Fed rate cuts of 25 basis points each by the end of 2025, with the first expected in September. Lower interest rates could spur economic activity and increase oil demand.
U.S. Inventory Outlook:
Industry group API and the Energy Information Administration (EIA) are set to release inventory data this week. Analysts expect U.S. crude stockpiles fell by around 1.2 million barrels in the week ending May 16. If confirmed, it would mark the third drawdown in four weeks. During the same week last year, inventories rose by 1.8 million barrels, while the five-year average for the period (2020–2024) is a 3.5 million-barrel decrease.
